32384 Federal Register / Vol. 68, No. 104 / Friday, May 30, 2003 / Rules and Regulations 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). Under section 307( b)( 1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 29, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule 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 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, Intergovernmental relations, Nitrogen dioxide, Ozone, Volatile organic compounds.

Dated: May 20, 2003. A. Stanley Meiburg, Acting Regional Administrator, Region 4.

 Part 52 of chapter I, title 40, of the Code of Federal Regulations, is amended as follows: PART 52   [ AMENDED]

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

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

Subpart S   Kentucky  2. Section 52.920( e) is amended by adding in numerical order a new entry for `` Appendix 24'' to read as follows:

§ 52.920 Identification of plan.

* * * * * ( e) * * *

EPA APPROVED KENTUCKY NONREGULATORY PROVISIONS Appendix Title/ subject State effective date EPA approval date Federal Register notice * * * * * * * 24 ................................................ Northern Kentucky Maintenance Plan revisions ... 05/ 02/ 03 05/ 30/ 03 [ 68 FR 32384].

[ FR Doc. 03   13417 Filed 5   29   03; 8: 45 am]

BILLING CODE 6560   50   P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [ OPP   2003   0088; FRL   7308   6]

Methoxyfenozide; Pesticide Tolerance AGENCY: Environmental Protection Agency ( EPA). ACTION: Final rule.

SUMMARY: This regulation establishes tolerances for residues of methoxyfenozide in or on cranberry; okra; pea, blackeyed, seed; pea, southern, seed; turnip, greens; and vegetable, cucurbit, group 9. The Interregional Research Project Number 4 ( IR 4) requested these tolerances under the Federal Food, Drug, and Cosmetic Act ( FFDCA), as amended by the Food Quality Protection Act ( FQPA) of 1996. DATES: This regulation is effective May 30, 2003. Objections and requests for hearings, identified by docket ID number OPP   2003   0088, must be received on or before July 29, 2003. ADDRESSES: Written objections and hearing requests may be submitted electronically, by mail, or through hand delivery/ courier. Please follow the detailed instructions as provided in Unit VI. of the SUPPLEMENTARY INFORMATION. FOR FURTHER INFORMATION CONTACT: By mail: Shaja R. Brothers, Registration Division ( 7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460   0001; telephone number: ( 703) 308   3194; e mail address: brothers. shaja@ epa. gov. SUPPLEMENTARY INFORMATION:

I. General Information A. Does this Action Apply to Me?

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:   Crop production ( NAICS 111)   Animal production ( NAICS 112)   Food manufacturing ( NAICS 311)   Pesticide manufacturing ( NAICS 32532) This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System ( NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT. B. How Can I Get Copies of this Document and Other Related Information?

1. Docket. EPA has established an official public docket for this action under docket identification ID number OPP   2003   0088. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information ( CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch ( PIRIB), Rm. 119, Crystal Mall # 2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8: 30 a. m. to 4 p. m., Monday through Friday, excluding legal holidays. The docket telephone number is ( 703) 305   5805. 2. Electronic access. You may access this Federal Register document electronically through the EPA Internet under the `` Federal Register'' listings at http:// www. epa. gov/ fedrgstr/. A frequently updated electronic version of 40 CFR part 180 is available at http:// www. access. gpo. gov/ nara/ cfr/ cfrhtml_ 00/ Title_ 40/ 40cfr180_ 00. html, a beta site currently under development. An electronic version of the public docket is available through EPA's VerDate Jan< 31> 2003 16: 33 May 29, 2003 Jkt 200001 PO 00000 Frm 00060 Fmt 4700 Sfmt 4700 E:\ FR\ FM\ 30MYR1. SGM 30MYR1 32385 Federal Register / Vol. 68, No. 104 / Friday, May 30, 2003 / Rules and Regulations electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http:// www. epa. gov/ edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I. B. 1. Once in the system, select `` search,'' then key in the appropriate docket ID number.

II. Background and Statutory Findings In the Federal Register of August 14, 2002 ( 67 FR 52996) ( FRL   7191   9), EPA issued a notice pursuant to section 408 of FFDCA, 21 U. S. C. 346a, as amended by FQPA ( Public Law 104   170), announcing the filing of a pesticide petition 2E6441 by IR 4, 681 U. S. Highway # 1 South, North Brunswick, NJ 08902   3390. That notice included a summary of the petitions prepared by Rohm and Haas Company, the registrant. There were no comments received in response to the notice of filing. In the Federal Register of March 21, 2003 ( 68 FR 13917) ( FRL   7297   1), EPA issued a notice pursuant to section 408 of FFDCA, 21 U. S. C. 346a, as amended by FQPA ( Public Law 104   170), announcing the filing of pesticide petitions ( 3E6527, 3E6528, and 3E6533) by IR 4, 681 U. S. Highway # 1 South, North Brunswick, NJ 08902   3390. That notice included a summary of the petitions prepared by Rohm and Haas Company, the registrant. There were no comments received in response to the notice of filing. The petitions requested that 40 CFR 180.544 be amended by establishing tolerances for residues of the insecticide methoxyfenozide, benzoic acid, 3 methoxy 2 methyl, 2( 3,5 dimethylbenzoyl) 2( 1,1 dimethylethyl) hydrazide, in or on cranberry at 0.5 parts per million ( ppm); okra at 2.0 ppm; pea, blackeyed, seed at 4.0 ppm; pea, southern, seed at 4.0 ppm; turnip, greens at 30 ppm; and vegetable, cucurbit, group 9 at 0.3 ppm. Section 408( b)( 2)( A)( i) of the FFDCA allows EPA to establish a tolerance ( the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is `` safe.'' Section 408( b)( 2)( A)( ii) of the FFDCA defines `` safe'' to mean that `` there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.'' This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408( b)( 2)( C) of the FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to `` ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .'' EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 of the FFDCA and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances November 26, 1997 ( 62 FR 62961) ( FRL   5754   7).

III. Aggregate Risk Assessment and Determination of Safety Consistent with section 408( b)( 2)( D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure, consistent with section 408( b)( 2) of the FFDCA, for tolerances for residues of methoxyfenozide on cranberry at 0.5 ppm; okra at 2.0 ppm; pea, blackeyed, seed at 4.0 ppm; pea, southern, seed at 4.0 ppm; turnip, greens at 30 ppm; and vegetable, cucurbit, group 9 at 0.3 ppm. EPA's assessment of exposures and risks associated with establishing these tolerances follow.

A. Toxicological Profile EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by methoxyfenozide is discussed in Unit II. A. of the Federal Register of September 20, 2002 ( 67 FR 59193) ( FRL   7198   5).

B. Toxicological Endpoints The dose at which no observed adverse effects levels are ( the NOAEL) from the toxicology study identified as appropriate for use in risk assessment is used to estimate the toxicological level of concern. However, the lowest dose observed at which adverse effects levels of concern are identified ( the LOAEL) is sometimes used for risk assessment if no NOAEL was achieved in the toxicology study selected. An uncertainty factor ( UF) is applied to reflect uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. An UF of 100 is routinely used, 10X to account for interspecies differences and 10X for intraspecies differences. For dietary risk assessment ( other than cancer) the Agency uses the UF to calculate an acute or chronic reference dose ( aRfD or cRfD) where the RfD is equal to the NOAEL divided by the appropriate UF ( RfD = NOAEL/ UF). Where an additional safety factor ( SF) is retained due to concerns unique to the FQPA, this additional factor is applied to the RfD by dividing the RfD by such additional factor. The acute or chronic Population Adjusted Dose ( aPAD or cPAD) is a modification of the RfD to accommodate this type of FQPA SF. For non dietary risk assessments ( other than cancer) the UF is used to determine the LOC. For example, when 100 is the appropriate UF ( 10X to account for interspecies differences and 10X for intraspecies differences) the LOC is 100. To estimate risk, a ratio of the NOAEL to exposures ( margin of exposure ( MOE) = NOAEL/ exposure) is calculated and compared to the LOC. The linear default risk methodology ( Q*) is the primary method currently used by the Agency to quantify carcinogenic risk. The Q* approach assumes that any amount of exposure will lead to some degree of cancer risk. A Q* is calculated and used to estimate risk which represents a probability of occurrence of additional cancer cases ( e. g., risk is expressed as 1 x 10 6 or one in a million). Under certain specific circumstances, MOE calculations will be used for the carcinogenic risk assessment. In this non linear approach, a `` point of departure'' is identified below which carcinogenic effects are not expected. The point of departure is typically a NOAEL based on an endpoint related to cancer effects though it may be a different value derived from the dose response curve. To estimate risk, a ratio of the point of departure to exposure ( MOEcancer = point of departure/ exposures) is calculated. A summary of the toxicological endpoints for methoxyfenozide used for human risk assessment is discussed in Unit II. B. of the Federal Register of September 20, 2002 ( 67 FR 59193).

C. Exposure Assessment 1. Dietary exposure from food and feed uses. Tolerances have been established ( 40 CFR 180.544) for the VerDate Jan< 31> 2003 16: 33 May 29, 2003 Jkt 200001 PO 00000 Frm 00061 Fmt 4700 Sfmt 4700 E:\ FR\ FM\ 30MYR1. SGM 30MYR1 32386 Federal Register / Vol. 68, No. 104 / Friday, May 30, 2003 / Rules and Regulations residues of methoxyfenozide, in or on a variety of raw agricultural commodities including pome fruit, cottonseed, and animals ( except poultry). Residues in plants, milk, meat and fat are regulated in terms of parent compound only. Residues in liver and meat byproducts ( except liver) are regulated in terms of combined residues of methoxyfenozide and its glucuronide metabolite ( RH 141,518). Risk assessments were conducted by EPA to assess dietary exposures from methoxyfenozide in food as follows: i. Acute exposure. Acute dietary risk assessments are performed for a fooduse pesticide if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1 day or single exposure. The Dietary Exposure Evaluation Model ( DEEMTM) analysis evaluated the individual food consumption as reported by respondents in the United States Department of Agriculture ( USDA) 1989   1992 nationwide Continuing Surveys of Food Intake by Individuals ( CSFII) and accumulated exposure to the chemical for each commodity. The following assumptions were made for the acute exposure assessments: No appropriate endpoint was identified in the oral toxicity studies including the acute neurotoxicity study in rats and the developmental toxicity studies in rats and rabbits. ii. Chronic exposure. In conducting this chronic dietary risk assessment the DEEMTM analysis evaluated the individual food consumption as reported by respondents in the USDA 1989   1992 or 1994   1996, nationwide CSFII and accumulated exposure to the chemical for each commodity. The following assumptions were made for the chronic exposure assessments: A Tier 1 ( assumptions: Tolerance level residues and 100 percent crop treated) chronic dietary risk assessment was conducted via DEEMTM. The established tolerances of 40 CFR 180.544 and the proposed tolerances were included in the analysis. DEEMTM default processing factors ( from DEEMTM Version 7.76) were used for all processed commodities that do not have individual tolerances. iii. Cancer. Methoxyfenozide is classified as a `` not likely'' human carcinogen. 2. Dietary exposure from drinking water. The Agency lacks sufficient monitoring exposure data to complete a comprehensive dietary exposure analysis and risk assessment for methoxyfenozide in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the physical characteristics of methoxyfenozide. The Agency uses the Generic Estimated Environmental Concentration ( GENEEC) or the Pesticide Root Zone/ Exposure Analysis Modeling System ( PRZM/ EXAMS) to estimate pesticide concentrations in surface water and SCIGROW which predicts pesticide concentrations in ground water. In general, EPA will use GENEEC ( a Tier 1 model) before using PRZM/ EXAMS ( a Tier 2 model) for a screening level assessment for surface water. The GENEEC model is a subset of the PRZM/ EXAMS model that uses a specific highend runoff scenario for pesticides. GENEEC incorporates a farm pond scenario, while PRZM/ EXAMS incorporate an index reservoir environment in place of the previous pond scenario. The PRZM/ EXAMS model includes a percent crop ( PC) area factor as an adjustment to account for the maximum PC coverage within a watershed or drainage basin. None of these models include consideration of the impact processing ( mixing, dilution, or treatment) of raw water for distribution as drinking water would likely have on the removal of pesticides from the source water. The primary use of these models by the Agency at this stage is to provide a coarse screen for sorting out pesticides for which it is highly unlikely that drinking water concentrations would ever exceed human health levels of concern. Since the models used are considered to be screening tools in the risk assessment process, the Agency does not use estimated environmental concentrations ( EECs) from these models to quantify drinking water exposure and risk as a % RfD or % PAD. Instead drinking water levels of comparison ( DWLOCs) are calculated and used as a point of comparison against the model estimates of a pesticide's concentrations in water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food and from residential uses. Since DWLOCs address total aggregate exposure to methoxyfenozide they are further discussed in the aggregate risk sections in Unit III. E. Based on the PRZM/ EXAMS model, the EECs of methoxyfenozide for surface water are estimated to be 43 parts per billion ( ppb) for acute, and 30 ppb for chronic. Based on the SCI GROW model the EEC of methoxyfenozide for acute and chronic exposures for ground water are estimated to be 3.5 ppb. 3. From non dietary exposure. The term `` residential exposure'' is used in this document to refer to nonoccupational non dietary exposure ( e. g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Methoxyfenozide is not registered for use on any sites that would result in residential exposure. 4. Cumulative exposure to substances with a common mechanism of toxicity. Section 408( b)( 2)( D)( v) of the FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider `` available information'' concerning the cumulative effects of a particular pesticide's residues and `` other substances that have a common mechanism of toxicity.'' EPA does not have, at this time, available data to determine whether methoxyfenozide has a common mechanism of toxicity with other substances. Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to methoxyfenozide and any other substances and methoxyfenozide does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that methoxyfenozide has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see the policy statements released by EPA's Office of Pesticide Programs concerning common mechanism determinations and procedures for cumulating effects from substances found to have a common mechanism on EPA's website at http:// www. epa. gov/ pesticides/ cumulative/.

D. Safety Factor for Infants and Children 1. In general. Section 408 of the FFDCA provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base on toxicity and exposure unless EPA determines that a different margin of safety will be safe for infants and children. Margins of safety are incorporated into EPA risk assessments either directly through use of a MOE VerDate Jan< 31> 2003 16: 33 May 29, 2003 Jkt 200001 PO 00000 Frm 00062 Fmt 4700 Sfmt 4700 E:\ FR\ FM\ 30MYR1. SGM 30MYR1 32387 Federal Register / Vol. 68, No. 104 / Friday, May 30, 2003 / Rules and Regulations analysis or through using uncertainty ( safety) factors in calculating a dose level that poses no appreciable risk to humans. 2. Prenatal and postnatal sensitivity. The toxicology data base for methoxyfenozide included acceptable developmental toxicity studies in both rats and rabbits as well as a 2 generation reproductive toxicity study in rats. The data provided no indication of increased sensitivity of rats or rabbits to in utero and/ or postnatal exposure to methoxyfenozide. 3. Conclusion. There is a complete toxicity data base for methoxyfenozide and exposure data are complete or are estimated based on data that reasonably accounts for potential exposures. EPA determined that the 10X SF to protect infants and children should be reduced to 1X for the following reasons:

  Based on weight of evidence considerations, EPA determined that a developmental neurotoxicity study in rats is not required to support the registration of methoxyfenozide.

  In developmental toxicity studies in rats and rabbits, no increased susceptibility in fetuses as compared to maternal animals was observed following in utero exposures.

  In a 2 generation reproduction study in rats, no increased susceptibility in pups as compared to adults was observed following in utero and postnatal exposures.

  The exposure assessments will not underestimate the potential dietary ( food and drinking water) or non dietary exposures for infants and children from the use of methoxyfenozide. E. Aggregate Risks and Determination of Safety To estimate total aggregate exposure to a pesticide from food, drinking water, and residential uses, the Agency calculates DWLOCs which are used as a point of comparison against the model estimates of a pesticide's concentration in water ( EECs). DWLOC values are not regulatory standards for drinking water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food and residential uses. In calculating a DWLOC, the Agency determines how much of the acceptable exposure ( i. e., the PAD) is available for exposure through drinking water e. g., allowable chronic water exposure milligrams/ kilogram/ day ( mg/ kg/ day) = cPAD  ( average food + residential exposure). This allowable exposure through drinking water is used to calculate a DWLOC. A DWLOC will vary depending on the toxic endpoint, drinking water consumption, and body weights. Default body weights and consumption values as used by the EPA's Office of Water are used to calculate DWLOCs: 2 liter ( L)/ 70 kg ( adult male), 2L/ 60 kg ( adult female), and 1L/ 10 kg ( child). Default body weights and drinking water consumption values vary on an individual basis. This variation will be taken into account in more refined screening level and quantitative drinking water exposure assessments. Different populations will have different DWLOCs. Generally, a DWLOC is calculated for each type of risk assessment used: Acute, short term, intermediate term, chronic, and cancer. When EECs for surface water and ground water are less than the calculated DWLOCs, EPA concludes with reasonable certainty that exposures to the pesticide in drinking water ( when considered along with other sources of exposure for which EPA has reliable data) would not result in unacceptable levels of aggregate human health risk at this time. Because EPA considers the aggregate risk resulting from multiple exposure pathways associated with a pesticide's uses, levels of comparison in drinking water may vary as those uses change. If new uses are added in the future, EPA will reassess the potential impacts of residues of the pesticide in drinking water as a part of the aggregate risk assessment process. 1. Acute risk. No appropriate endpoint was identified in the oral toxicity studies including the acute neurotoxicity study in rats and the developmental toxicity studies in rats and rabbits. Accordingly, no acute risk is expected from exposure to methoxyfenozide. 2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that exposure to methoxyfenozide from food will utilize 20.5% of the cPAD for the U. S. population, 26.4% of the cPAD for all infant < 1 year old, and 46.4% of the cPAD for children 1   2 years old. There are no residential uses for methoxyfenozide that result in chronic residential exposure to methoxyfenozide. In addition, there is potential for chronic dietary exposure to methoxyfenozide in drinking water. After calculating DWLOCs and comparing them to the EECs for surface water and ground water, EPA does not expect the aggregate exposure to exceed 100% of the cPAD, as shown in the following Table 1:

TABLE 1.   AGGREGATE RISK ASSESSMENT FOR CHRONIC ( NON CANCER) EXPOSURE TO METHOXYFENOZIDE Population Subgroup cPAD mg/ kg/ day % cPAD ( Food) Surface Water EEC ( ppb) Ground Water EEC ( ppb) Chronic DWLOC ( ppb)

U. S. population 0.102 20.5 30 3.5 2,800 All infants (< 1 year old) 0.102 26.4 30 3.5 750 Children ( 1   2 years old) 0.102 46.4 30 3.5 550 Females ( 13   49 years old) 0.102 18.3 30 3.5 2,500 3. Short term risk. Short term aggregate exposure takes into account residential exposure plus chronic exposure to food and water ( considered to be a background exposure level). Methoxyfenozide is not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which do not exceed the Agency's level of concern. 4. Intermediate term risk. Intermediate term aggregate exposure takes into account residential exposure plus chronic exposure to food and water ( considered to be a background exposure level). Methoxyfenozide is not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which do not exceed the Agency's level of concern.

VerDate Jan< 31> 2003 16: 33 May 29, 2003 Jkt 200001 PO 00000 Frm 00063 Fmt 4700 Sfmt 4700 E:\ FR\ FM\ 30MYR1. SGM 30MYR1 32388 Federal Register / Vol. 68, No. 104 / Friday, May 30, 2003 / Rules and Regulations 5. Aggregate cancer risk for U. S. population. The Agency has classified methoxyfenozide as a `` not likely'' human carcinogen according to the EPA Proposed Guidelines for Carcinogen Risk Assessment ( April 10, 1996). This classification is based on the lack of evidence of carcinogenicity in male and female rats as well as in male and female mice and on the lack of genotoxicity in an acceptable battery of mutagenicity studies. Therefore, methoxyfenozide is not expected to pose a cancer risk. 6. Determination of safety. Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, and to infants and children from aggregate exposure to methoxyfenozide residues.

IV. Other Considerations A. Analytical Enforcement Methodology Adequate enforcement methods are available for determination of methoxyfenozide residues in plant commodities. The similar methods that are used vary depending on the matrices involved. The enforcement method TR 34   98   87 high performance liquid chromotography using ultra violet detection ( HPLC/ UV) was used for data collection in all crop field trials on the subject crops. It measures residues of methoxyfenozide per se, and is considered to be a adequate both for data collection and for tolerance enforcement. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755   5350; telephone number: ( 410) 305   2905; email address: residuemethods@ epa. gov.

B. International Residue Limits There are no Codex, Canadian, or Mexican maximum residue levels established for residues of methoxyfenozide in or on the subject crops.

V. Conclusion Therefore, tolerances are established for residues of methoxyfenozide, benzoic acid, 3 methoxy 2 methyl, 2 ( 3,5 dimethylbenzoyl) 2( 1,1 dimethylethyl) hydrazide, in or on cranberry at 0.5 ppm; okra at 2.0 ppm; pea, blackeyed, seed at 4.0 ppm; pea, southern, seed at 4.0 ppm; turnip, greens at 30 ppm; and vegetable, cucurbit, group 9 at 0.3 ppm.

VI. Objections and Hearing Requests Under section 408( g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408( g) of the FFDCA provides essentially the same process for persons to `` object'' to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408( d) of FFDCA, as was provided in the old sections 408 and 409 of the FFDCA. However, the period for filing objections is now 60 days, rather than 30 days.

A. What Do I Need to Do to File an Objection or Request a Hearing? You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number OPP   2003   0088 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before July 29, 2003. 1. Filing the request. Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections ( 40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues( s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector ( 40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice. Mail your written request to: Office of the Hearing Clerk ( 1900C), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460   0001. You may also deliver your request to the Office of the Hearing Clerk in Rm. 104, Crystal Mall # 2, 1921 Jefferson Davis Hwy., Arlington, VA. The Office of the Hearing Clerk is open from 8 a. m. to 4 p. m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is ( 703) 603   0061. 2. Tolerance fee payment. If you file an objection or request a hearing, you must also pay the fee prescribed by 40 CFR 180.33( i) or request a waiver of that fee pursuant to 40 CFR 180.33( m). You must mail the fee to: EPA Headquarters Accounting Operations Branch, Office of Pesticide Programs, P. O. Box 360277M, Pittsburgh, PA 15251. Please identify the fee submission by labeling it `` Tolerance Petition Fees.'' EPA is authorized to waive any fee requirement `` when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.'' For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at ( 703) 305   5697, by e mail at tompkins. jim@ epa. gov, or by mailing a request for information to Mr. Tompkins at Registration Division ( 7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460   0001. If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division ( 7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460   0001. 3. Copies for the Docket. In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VI. A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I. B. 1. Mail your copies, identified by docket ID number OPP   2003   0088, to: Public Information and Records Integrity Branch, Information Resources and Services Division ( 7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460   0001. In person or by courier, bring a copy to the location of the PIRIB described in Unit I. B. 1. You may also send an electronic copy of your request via e mail to: oppdocket epa. gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/ 8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

VerDate Jan< 31> 2003 16: 33 May 29, 2003 Jkt 200001 PO 00000 Frm 00064 Fmt 4700 Sfmt 4700 E:\ FR\ FM\ 30MYR1. SGM 30MYR1 32389 Federal Register / Vol. 68, No. 104 / Friday, May 30, 2003 / Rules and Regulations B. When Will the Agency Grant a Request for a Hearing?

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues( s) in the manner sought by the requestor would be adequate to justify the action requested ( 40 CFR 178.32).

VII. Regulatory Assessment Requirements This final rule establishes a tolerance under section 408( d) of the FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget ( OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review ( 58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866 due to its lack of significance, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use ( 66 FR 28355, May 22, 2001). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act ( PRA), 44 U. S. C. 3501 et seq., or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 ( UMRA) ( Public Law 104   4). Nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low Income Populations ( 59 FR 7629, February 16, 1994); or OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks ( 62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12( d) of the National Technology Transfer and Advancement Act of 1995 ( NTTAA), Public Law 104   113, section 12( d) ( 15 U. S. C. 272 note). Since tolerances and exemptions that are established on the basis of a petition under section 408( d) of the FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act ( RFA) ( 5 U. S. C. 601 et seq.) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism( 64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to develop an accountable process to ensure `` meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.'' `` Policies that have federalism implications'' is defined in the Executive Order to include regulations that have `` substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.'' This final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408( n)( 4) of the FFDCA. For these same reasons, the Agency has determined that this rule does not have any `` tribal implications'' as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments ( 65 FR 67249, November 6, 2000). Executive Order 13175, requires EPA to develop an accountable process to ensure `` meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.'' `` Policies that have tribal implications'' is defined in the Executive Order to include regulations that have `` substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.'' This rule will not have substantial direct effects on tribal governments, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.

VIII. 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 rule and other required information to the U. S. Senate, the U. S. House of Representatives, and the Comptroller General of the United States prior to publication of this final rule in the Federal Register. This final rule is not a `` major rule'' as defined by 5 U. S. C. 804( 2).

List of Subjects in 40 CFR Part 180 Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.

Dated: May 20, 2003. Richard P. Keigwin, Jr., Acting Director, Registration Division, Office of Pesticide Programs.

 Therefore, 40 CFR chapter I is amended as follows:

PART 180   [ AMENDED]

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

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

 2. Section 180.544 is amended by alphabetically adding commodities to the table in paragraph ( a) to read as follows:

§ 180.544 Methoxyfenozide; tolerances for residues.

( a) * * *

Commodity Parts per million * * * * * Cranberry ................................................................................................................................................... 0.5 * * * * * Okra ........................................................................................................................................................... 2.0 VerDate Jan< 31> 2003 16: 33 May 29, 2003 Jkt 200001 PO 00000 Frm 00065 Fmt 4700 Sfmt 4700 E:\ FR\ FM\ 30MYR1. SGM 30MYR1 32390 Federal Register / Vol. 68, No. 104 / Friday, May 30, 2003 / Rules and Regulations Commodity Parts per million Pea, blackeyed, seed ................................................................................................................................ 4.0 Pea, southern, seed .................................................................................................................................. 4.0 * * * * * Turnip, greens ........................................................................................................................................... 30 * * * * * Vegetable, cucurbit, group 9 ..................................................................................................................... 0.3 * * * * *

[ FR Doc. 03   13563 Filed 5   29   03; 8: 45 am]

BILLING CODE 6560   50   S ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [ OPP   2003   0133; FRL   7306   8]

Clothianidin; Pesticide Tolerance AGENCY: Environmental Protection Agency ( EPA). ACTION: Final rule.

SUMMARY: This regulation establishes tolerances for residues of clothianidin in or on canola, corn, and milk. In addition, tolerances are established for indirect or inadvertent residues of clothianidin in or on nongrass animal feed; cereal grain forage, fodder and straw; grass forage, fodder and hay; and soybean forage and hay. Bayer Corporation requested these tolerances under the Federal Food, Drug, and Cosmetic Act ( FFDCA), as amended by the Food Quality Protection Act of 1996 ( FQPA). DATES: This regulation is effective May 30, 2003. Objections and requests for hearings, identified by docket ID number OPP   2003   0133, must be received on or before July 29, 2003. ADDRESSES: Written objections and hearing requests may be submitted electronically, by mail, or through hand delivery/ courier. Follow the detailed instructions as provided in Unit VI. of the SUPPLEMENTARY INFORMATION. FOR FURTHER INFORMATION CONTACT: Daniel Kenny, Registration Division ( 7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460   0001; telephone number: ( 703) 305   7546; e mail address: kenny. dan@ epa. gov.

SUPPLEMENTARY INFORMATION:

I. General Information A. Does this Action Apply to Me?

You may be potentially affected by this action if you are an agricultural producer, food manufacturer or pesticide manufacturer. Potentially affected entities may include, but are not limited to:   Crop Production ( NAICS 111)   Animal Production ( NAICS 112)   Food Manufacturing ( NAICS 311)   Pesticide Manufacturing ( NAICS 32532) This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System ( NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT.

B. How Can I Get Copies of this Document and Other Related Information?

1. Docket. EPA has established an official public docket for this action under docket identification ( ID) number OPP   2003   0133. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information ( CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch ( PIRIB), Rm. 119, Crystal Mall # 2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8: 30 a. m. to 4 p. m., Monday through Friday, excluding legal holidays. The docket telephone number is ( 703) 305   5805. 2. Electronic access. You may access this Federal Register document electronically through the EPA Internet under the `` Federal Register'' listings at http:// www. epa. gov/ fedrgstr/. A frequently updated electronic version of 40 CFR part 180 is available at http:// www. access. gpo. gov/ nara/ cfr/ cfrhtml_ 00/ Title_ 40/ 40cfr180_ 00. html, a beta site currently under development. To access the OPPTS Harmonized Guidelines referenced in this document, go directly to the guidelines at http:// www. epa. gov/ opptsfrs/ home/ guidelin. htm. An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http:// www. epa. gov/ edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I. B. 1. Once in the system, select `` search,'' then key in the appropriate docket ID number.

II. Background and Statutory Findings In the Federal Register of November 14, 2001 ( 66 FR 57079) ( FRL   6809   7), EPA issued a notice pursuant to section 408 of FFDCA, 21 U. S. C. 346a, as amended by FQPA ( Public Law 104   170), announcing the filing of a pesticide petition ( PP 1F6315) by Bayer Corporation, 8400 Hawthorn Road, Kansas City, MO 64120. That notice included a summary of the petition prepared by Bayer Corporation, the registrant. There were no comments received in response to the notice of filing. The petition requested that 40 CFR part 180 be amended by establishing tolerances for residues of the insecticide clothianidin, ( E) 1( 2 chloro 1,3 thiazol 5 ylmethyl) 3 methyl 2 nitroguanidine, in or on canola, seed at 0.01 parts per million ( ppm); corn, field, grain at 0.01 ppm; corn, pop, grain at 0.01 ppm; corn, sweet, kernel plus cob with husk removed at 0.01 ppm; corn, field, forage at 0.10 ppm; corn, sweet, forage at 0.10 ppm; corn, field, stover at 0.10 ppm; corn, sweet, stover at 0.10 ppm; corn, pop, stover at 0.10 ppm; and milk at 0.01 ppm. Following the review of all the data, tolerances are also required on the following rotational crops, which are used only for livestock feeds. These tolerances do not impact the dietary risk VerDate Jan< 31> 2003 16: 33 May 29, 2003 Jkt 200001 PO 00000 Frm 00066 Fmt 4700 Sfmt 4700 E:\ FR\ FM\ 30MYR1. SGM 30MYR1


[Federal Register Volume 83, Number 85 (Wednesday, May 2, 2018)]
[Notices]
[Pages 19371-19376]
[FR Doc No: 2018-09265]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83120; File No. SR-NYSEArca-2018-04]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change To Adopt New NYSE Arca Rule 8.900-E and To List and Trade
Shares of the Royce Pennsylvania ETF; Royce Premier ETF; and Royce
Total Return ETF Under Proposed NYSE Arca Rule 8.900-E

April 26, 2018.

    On January 8, 2018, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to: (1) Adopt NYSE Arca Rule 8.900-E (Managed Portfolio Shares);
and (2) list and trade shares (``Shares'') of the Royce Pennsylvania
ETF, Royce Premier ETF, and Royce Total Return ETF under proposed NYSE
Arca Rule 8.900-E. The proposed rule change was published for comment
in the Federal Register on January 26, 2018.\3\ On March 7, 2018,
pursuant to Section 19(b)(2) of the Exchange Act,\4\ the Commission
designated a longer period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to disapprove the proposed rule change.\5\ The
Commission has received five comments on the proposed rule change.\6\
This order institutes proceedings under Section 19(b)(2)(B) of the
Exchange Act \7\ to determine whether to approve or disapprove the
proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 82549 (January 19,
2018), 83 FR 3846 (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 82824, 83 FR 10934
(March 13, 2018). The Commission designated April 26, 2018, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
    \6\ See letters from: (1) Terence W. Norman, Founder, Blue
Tractor Group, LLC, dated February 6, 2018 (``Blue Tractor Letter
I''); (2) Simon P. Goulet, Co-Founder, Blue Tractor Group, LLC,
dated February 13, 2018 (``Blue Tractor Letter II''); (3) Todd J.
Broms, Chief Executive Officer, Broms & Company LLC, dated February
16, 2018 (``Broms Letter''); (4) Kevin S. Haeberle, Associate
Professor of Law, William & Mary Law School, dated February 16, 2018
(``Haeberle Letter''); and (5) Gary L. Gastineau, President, ETF
Consultants.com, Inc., dated March 6, 2018 (``Gastineau Letter'').
The comment letters are available at https://www.sec.gov/comments/sr-nysearca-2018-04/nysearca201804.htm.
    \7\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

I. Summary of the Exchange's Description of the Proposed Rule Change
\8\
---------------------------------------------------------------------------

    \8\ For a complete description of the Exchange's proposal,
including a description of the Precidian ETF Trust II (``Trust''),
see the Notice, supra note 3.
---------------------------------------------------------------------------

    The Exchange proposes to adopt new NYSE Arca Rule 8.900-E, which
would govern the listing and trading of Managed Portfolio Shares.\9\
The Exchange also proposes to list and trade the Shares of the Royce
Pennsylvania ETF, Royce Premier ETF, and Royce Total Return ETF under
proposed NYSE Arca Rule 8.900-E (each the ``Fund,'' and collectively
the ``Funds'').
---------------------------------------------------------------------------

    \9\ Proposed NYSE Arca Rule 8.900-E(c)(1) defines the term
``Managed Portfolio Share'' as a security that (a) represents an
interest in a registered investment company (``Investment Company'')
organized as an open-end management investment company or similar
entity, that invests in a portfolio of securities selected by the
Investment Company's investment adviser consistent with the
Investment Company's investment objectives and policies; (b) is
issued in a specified aggregate minimum number of shares equal to a
Creation Unit (as defined in proposed Rule 8.900-E(c)(3)), or
multiples thereof, in return for a designated portfolio of
securities (and/or an amount of cash) with a value equal to the next
determined net asset value (``NAV''); and (c) when aggregated in the
same specified aggregate number of shares equal to a Redemption Unit
(as defined in proposed Rule 8.900-E(c)(4)), or multiples thereof,
may be redeemed at the request of an authorized participant, which
authorized participant will be paid through a confidential account
established for its benefit (``Confidential Account'') a portfolio
of securities and/or cash with a value equal to the next determined
NAV.
---------------------------------------------------------------------------

A. Description of the Funds

    The portfolio for each Fund will consist of long and/or short
positions in U.S.-listed securities and shares issued

by other U.S.-listed exchange-traded funds (``ETFs'').\10\ All
exchange-listed equity securities in which the Funds will invest will
be listed and traded on U.S. national securities exchanges.
---------------------------------------------------------------------------

    \10\ The Exchange represents that, for purposes of the filing,
ETFs include Investment Company Units (as described in NYSE Arca
Rule 5.2-E(j)(3)); Portfolio Depository Receipts (as described in
NYSE Arca Rule 8.100-E); and Managed Fund Shares (as described in
NYSE Arca Rule 8.600-E). The ETFs in which the Funds will invest all
will be listed and traded on U.S. national securities exchanges.
While the Funds may invest in inverse ETFs, the Funds will not
invest in leveraged (e.g., 2X, -2X, 3X, or -3X) ETFs.
---------------------------------------------------------------------------

1. Royce Pennsylvania ETF
    Under normal market conditions,\11\ the Royce Pennsylvania ETF will
invest at least 65% of its assets in U.S. exchange-listed equity
securities of small-cap companies with market capitalizations up to $3
billion that Royce & Associates, LP (``Royce''), the Fund's investment
sub-adviser, believes are trading below the sub-adviser's estimate of
their current worth. The Fund may invest in U.S. exchange-listed ETFs.
The Fund may sell securities to, among other things, secure gains,
limit losses, re-deploy assets into what Royce deems to be more
promising opportunities, and/or manage cash levels in the Fund's
portfolio.
---------------------------------------------------------------------------

    \11\ Proposed Rule 8.900-E(c)(6) defines the term ``normal
market conditions'' as including, but not limited to, the absence of
trading halts in the applicable financial markets generally;
operational issues (e.g., systems failure) causing dissemination of
inaccurate market information; or force majeure type events such as
natural or manmade disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption or any similar intervening
circumstance.
---------------------------------------------------------------------------

2. Royce Premier ETF
    Under normal market conditions, the Royce Premier ETF will invest
at least 80% of its net assets in a limited number of U.S. exchange-
listed equity securities of primarily small-cap companies with market
capitalizations from $1 billion to $3 billion at the time of
investment. The Fund may invest in U.S. exchange-listed ETFs. The Fund
may sell securities to, among other things, secure gains, limit losses,
re-deploy assets into what Royce deems to be more promising
opportunities, and/or manage cash levels in the Fund's portfolio.
3. Royce Total Return ETF
    Under normal market conditions, the Royce Total Return ETF will
invest at least 65% of its assets in dividend-paying U.S.-listed
securities of small-cap companies with market capitalizations up to $3
billion that Royce believes are trading below its estimate of their
current worth. The Fund may invest in U.S. exchange-listed ETFs. The
Fund may sell securities to, among other things, secure gains, limit
losses, re-deploy assets into what Royce deems to be more promising
opportunities, and/or manage cash levels in the Fund's portfolio.
4. Other Investments
    While each Fund, under normal market conditions, will invest
primarily in U.S.-listed equity securities, as described above, each
Fund may invest its remaining assets in other securities and financial
instruments as follows: (i) U.S. exchange-listed warrants, rights, and
options (limited to 5% of total assets); (ii) cash or cash equivalents;
\12\ and (iii) the securities of other investment companies.
---------------------------------------------------------------------------

    \12\ The Exchange states that, for purposes of the filing, cash
equivalents include short-term instruments (instruments with
maturities of less than 3 months) of the following types: (i) U.S.
Government securities, including bills, notes, and bonds differing
as to maturity and rates of interest, which are either issued or
guaranteed by the U.S. Treasury or by U.S. Government agencies or
instrumentalities; (ii) certificates of deposit issued against funds
deposited in a bank or savings and loan association; (iii) bankers'
acceptances, which are short-term credit instruments used to finance
commercial transactions; (iv) repurchase agreements and reverse
repurchase agreements; (v) bank time deposits, which are monies kept
on deposit with banks or savings and loan associations for a stated
period of time at a fixed rate of interest; (vi) commercial paper,
which are short-term unsecured promissory notes; and (vii) money
market funds.
---------------------------------------------------------------------------

5. Investment Restrictions
    The Funds will not invest in futures, forwards, or swaps. Further,
each Fund's investments will be consistent with its investment
objective and will not be used to enhance leverage. While the Funds may
invest in inverse ETFs, they will not invest in leveraged (e.g., 2X, -
2X, 3X or -3X) ETFs. Finally, the equity securities (other than non-
exchange-listed investment company securities) and options in which the
Funds invest will be listed on a U.S. national securities exchange.

B. Key Features of Managed Portfolio Shares

    According to the Exchange, while Investment Companies issuing
Managed Portfolio Shares would be actively-managed, and in that respect
would be similar to those issuing Managed Fund Shares,\13\ Managed
Portfolio Shares would differ from Managed Fund Shares in the following
respects:
---------------------------------------------------------------------------

    \13\ Managed Fund Shares are shares of actively-managed
Investment Companies listed and traded under NYSE Arca Rule 8.600-E.
---------------------------------------------------------------------------

     First, issues of Managed Fund Shares are required to
disseminate their ``Disclosed Portfolio'' at least once daily.\14\ By
contrast, the portfolio for an issue of Managed Portfolio Shares would
be disclosed only quarterly.
---------------------------------------------------------------------------

    \14\ NYSE Arca Rule 8.600-E(c)(2) defines the term ``Disclosed
Portfolio'' as the identities and quantities of the securities and
other assets held by the Investment Company that will form the basis
for the Investment Company's calculation of NAV at the end of the
business day. NYSE Arca Rule 8.600-E(d)(2)(B)(i) requires that, for
Managed Fund Shares, the Disclosed Portfolio will be disseminated at
least once daily and will be made available to all market
participants at the same time.
---------------------------------------------------------------------------

     Second, in connection with the creation of shares in
``Creation Unit'' size or the redemption of shares in ``Redemption
Unit'' size, the delivery or receipt of any portfolio securities in
kind would be effected through an agent (``AP Representative'') in a
Confidential Account established for the benefit of the creating or
redeeming authorized participant without disclosing the identity of the
securities to the authorized participant.
     Third, for each series of Managed Portfolio Shares, a
Verified Intraday Indicative Value (``VIIV'') would be disseminated by
the Reporting Authority (as defined in proposed NYSE Arca Rule 8.900-
E(c)(5)) and/or by one or more major market-data vendors every second
during the Exchange's Core Trading Session (normally, 9:30 a.m. to 4:00
p.m., Eastern Time (``E.T.'')).\15\ The Exchange states that the
dissemination of the VIIV will allow investors to determine the
estimated intra-day value of the underlying portfolio of a series of
Managed Portfolio Shares and will provide a close estimate of that
value throughout the trading day.\16\
---------------------------------------------------------------------------

    \15\ Proposed NYSE Arca Rule 8.900-E(c)(2) defines the VIIV as
the estimated indicative value of a Managed Portfolio Share based on
all of the holdings of a series of Managed Portfolio Shares as of
the close of business on the prior business day, and, for corporate
actions, based on the applicable holdings as of the opening of
business on the current business day, priced and disseminated in one
second intervals during the Core Trading Session.
    \16\ According to the Exchange, the VIIV should not be viewed as
a ``real-time'' update of the NAV per Share of each Fund, because
the VIIV may not be calculated in the same manner as the NAV, which
will be computed once a day.
---------------------------------------------------------------------------

C. Arbitrage of Managed Portfolio Shares

    The Exchange asserts that market makers will be able to make
efficient and liquid markets in the Shares priced near the VIIV as long
as the VIIV is disseminated every second and market makers employ
market making techniques such as ``statistical arbitrage,'' including
correlation hedging, beta hedging, and dispersion trading, which the
Exchange represents is currently used throughout the

financial services industry, to make efficient markets in exchange-
traded products.\17\ According to the Exchange, if an authorized
participant believes that the Shares are trading at a price that is
higher than the value of the underlying portfolio--for example, if the
market price for the Shares is higher than the VIIV--then the
authorized participant may sell the Shares short and purchase
securities that the authorized participant believes will track the
movements of the Shares. When the spread narrows, the authorized
participant would execute offsetting orders or enter an order with its
AP Representative to create Shares. According to the Exchange, the
authorized participant's purchase of the portfolio securities into its
Confidential Account, combined with the sale of the Shares, may create
downward pressure on the price of the Shares and/or upward pressure on
the price of the portfolio securities, bringing the market price of the
Shares and the value of a Fund's portfolio securities closer together.
---------------------------------------------------------------------------

    \17\ According to the Exchange, statistical arbitrage enables a
trader to construct an accurate proxy for another instrument,
allowing it to hedge the other instrument or buy or sell the
instrument when it is cheap or expensive in relation to the proxy.
The Exchange states that statistical analysis permits traders to
discover correlations, based purely on trading data without regard
to other fundamental drivers. The Exchange also states that
correlations are a function of differentials, over time, between one
instrument or group of instruments and one or more other
instruments, and that once the nature of these price deviations have
been quantified, a universe of securities is searched in an effort
to, in the case of a hedging strategy, minimize the differential. In
addition, the Exchange also states that, once a suitable hedging
proxy has been identified, a trader can minimize portfolio risk by
executing the hedging basket. According to the Exchange, the trader
then can monitor the performance of this hedge throughout the trade
period, making correction where warranted. The Exchange states that,
in the case of correlation hedging, the analysis seeks to find a
proxy that matches the pricing behavior of the Fund, and that in the
case of beta hedging, the analysis seeks to determine the
relationship between the price movement over time of the Fund and
that of another stock.
---------------------------------------------------------------------------

    Similarly, according to the Exchange, an authorized participant
could buy the Shares and instruct the AP Representative to redeem them
and then sell the underlying portfolio securities from its Confidential
Account in an attempt to profit when the Shares trade at a discount to
the portfolio securities. According to the Exchange, the authorized
participant's purchase of the Shares in the secondary market, combined
with the sale of the portfolio securities from its Confidential
Account, may create upward pressure on the price of the Shares and/or
downward pressure on the price of portfolio securities, driving the
market price of the Shares and the value of the Fund's portfolio
securities closer together. The Exchange states that, according to
Precidian Funds LLC, the investment adviser to the Trust (``Adviser''),
this process is identical to how many authorized participants currently
arbitrage existing, traditional ETFs, except for the use of the
Confidential Account.

D. The Creation and Redemption Procedures

    The Exchange states that, generally, the Shares will be purchased
and redeemed on an in-kind basis, so that, except where the purchase or
redemption would include cash under the circumstances described in the
applicable Fund's registration statement, purchasers will be required
to purchase ``Creation Units'' by making an in-kind deposit of
specified instruments (``Deposit Instruments''), and authorized
participants redeeming their Shares will receive an in-kind transfer of
specified instruments (``Redemption Instruments'') in their
Confidential Account through an AP Representative. On any given
business day, the names and quantities of the instruments that
constitute the Deposit Instruments and the names and quantities of the
instruments that constitute the Redemption Instruments will be
identical, and these instruments may be referred to, in the case of
either a purchase or redemption, as the ``Creation Basket.''
    In the case of a redemption, a Fund's custodian (``Custodian'')
will typically deliver securities to the Confidential Account on a pro
rata basis with a value approximately equal to the value of the Shares
tendered for redemption at the order cut-off time established by the
Fund. The Custodian will make delivery of the securities by appropriate
entries on its books and records, transferring ownership of the
securities to the authorized participant's Confidential Account,
subject to delivery of the Shares redeemed. The AP Representative will
in turn liquidate, hedge, or otherwise manage the securities based on
instructions from the authorized participant.\18\ The AP Representative
will pay the liquidation proceeds net of expenses, plus or minus any
cash balancing amount, to the authorized participant through DTC.\19\
The redemption securities that the Confidential Account receives are
expected to mirror the portfolio holdings of a Fund pro rata.
---------------------------------------------------------------------------

    \18\ The Exchange represents that an authorized participant will
issue execution instructions to the AP Representative and be
responsible for all associated profit or losses. Like a traditional
ETF, the authorized participant has the ability to sell the basket
securities at any point during normal trading hours.
    \19\ According to the Exchange, under applicable provisions of
the Internal Revenue Code, the authorized participant is expected to
be deemed a ``substantial owner'' of the Confidential Account
because it receives distributions from the Confidential Account. As
a result, the Exchange states, all income, gain, or loss realized by
the Confidential Account will be directly attributed to the
authorized participant. The Exchange also states that, in a
redemption, the authorized participant will have a basis in the
distributed securities equal to the fair market value at the time of
the distribution, and any gain or loss realized on the sale of those
Shares will be taxable income to the authorized participant.
---------------------------------------------------------------------------

    In the case of a creation, the authorized participant will enter
into an irrevocable creation order with the Fund and then direct the AP
Representative to purchase the necessary basket of portfolio
securities. The AP Representative will then purchase the necessary
securities in the Confidential Account. Once the necessary basket of
securities has been acquired, the purchased securities held in the
Confidential Account will be contributed in-kind to the Fund.
    The Exchange states that, in purchasing the necessary securities
for creation purposes, and, conversely, in selling the portfolio
securities for redemption purposes, the AP Representative will be
required, by the terms of the Confidential Account agreement, to
obfuscate the trades by use of tactics such as breaking the trades into
multiple purchases or sales and transacting in multiple marketplaces.

E. Availability of Information

    Each Fund will be required to file with the Commission its complete
portfolio schedules for the second and fourth fiscal quarters on Form
N-CSR under the 1940 Act, and to file its complete portfolio schedules
for the first and third fiscal quarters on Form N-Q under the 1940 Act,
within 60 days of the end of the quarter. Form N-Q requires funds to
file the same schedules of investments that are required in annual and
semi-annual reports to shareholders. The Trust's SAI and each Fund's
shareholder reports will be available free upon request from the Trust.
These documents and forms may be viewed on-screen or downloaded from
the Commission's website at www.sec.gov.
    In addition, the VIIV will be widely disseminated by the Reporting
Authority and/or one or more major market-data vendors at least every
second during the Exchange's Core Trading Session. According to the

Exchange, the VIIV will include all accrued income and expenses of a
Fund, and any extraordinary expenses booked during the day that would
be taken into account in calculating the Fund's NAV will also be taken
into account in calculating the VIIV.
    For purposes of the VIIV, securities held by a Fund will be valued
throughout the day based on the mid-point between the disseminated
current national best bid and offer. According to the Exchange, by
utilizing the mid-point pricing for purposes of VIIV calculation, stale
prices are eliminated and a more accurate representation of the real-
time value of the underlying securities is provided to the market.
Specifically, according to the Exchange, quotations based on the mid-
point of bid/ask spreads more accurately reflect current market
sentiment by providing real time information on where market
participants are willing to buy or sell securities at that point in
time. The Exchange also believes that the use of quotations will dampen
the impact of any momentary spikes in the price of a portfolio
security.
    According to the Exchange, each Fund will utilize two separate
pricing feeds to provide two separate, independent sources of pricing
information. Each Fund will also utilize a ``Pricing Verification
Agent'' and establish a computer-based protocol that will permit the
Pricing Verification Agent to continuously compare the two data streams
on a real time basis.\20\ A single VIIV will be disseminated publicly
for each Fund; however, the Pricing Verification Agent will
continuously compare the public VIIV against a non-public, alternative
intra-day indicative value to which the Pricing Verification Agent has
access. Upon notification to the Exchange by the issuer of a series of
Managed Portfolio Shares, or its agent, that the public VIIV and non-
public, alternative intra-day indicative value differ by more than 25
basis points for 60 seconds, the Exchange will halt trading as soon as
practicable in the Shares until the discrepancy is resolved.\21\ Each
Fund's board of directors will review the procedures used to calculate
the VIIV and maintain its accuracy as appropriate, but not less than
annually. The specific methodology for calculating the VIIV will be
disclosed on each Fund's website.
---------------------------------------------------------------------------

    \20\ The Exchange states that a Fund's Custodian will provide,
on a daily basis, the identities and quantities of portfolio
securities that will form the basis for the Fund's calculation of
NAV at the end of the business day, plus any cash in the portfolio,
to the Pricing Verification Agent for purposes of pricing.
    \21\ According to the Exchange, for the period January 1, 2017,
to October 31, 2017, the average bid/ask spread on actively managed
equity ETFs (Managed Fund Shares) traded on NYSE Arca, as a
percentage, was 38 basis points. For the same period, the spread on
all exchange-traded products traded on NYSE Arca, as a percentage,
was 54 basis points. A continuous deviation for sixty seconds could
indicate an error in the feed or in a calculation engine used to
calculate the two intraday indicative values. The Exchange states
that the Trust reserves the right to change these thresholds to the
extent deemed appropriate and approved by the Fund's board of
directors.
---------------------------------------------------------------------------

F. Surveillance

    The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by the Exchange, as
well as cross-market surveillances administered by the Financial
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange,
which are designed to detect violations of Exchange rules and
applicable federal securities laws. The Exchange represents that these
procedures are adequate to properly monitor Exchange trading of the
Shares in all trading sessions and to deter and detect violations of
Exchange rules and federal securities laws applicable to trading on the
Exchange.\22\
---------------------------------------------------------------------------

    \22\ The Exchange states that these surveillances generally
focus on detecting securities trading outside their normal patterns,
which could be indicative of manipulative or other violative
activity. The Exchange represents that the Exchange or FINRA, on
behalf of the Exchange, or both, will communicate as needed
regarding trading in the Shares, underlying common stocks, rights,
warrants, ETFs, and exchange-listed options with other markets and
other entities that are members of the Intermarket Surveillance
Group (``ISG''), and the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading information regarding such
securities from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares,
underlying common stocks, rights, warrants, ETFs and exchange-listed
options from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
---------------------------------------------------------------------------

    The Exchange represents that the Adviser will make available daily
to FINRA and the Exchange the portfolio holdings of each Fund in order
to facilitate the performance of the surveillances referred to above.
In addition, the Exchange states that it has a general policy
prohibiting the distribution of material, non-public information by its
employees.

II. Summary of Comment Letters

    The Commission has received five comment letters on the proposed
rule change, each of which expresses opposition to the proposed rule
change.\23\ As of the date of this order instituting proceedings, the
Exchange has not submitted a response to the comments.
---------------------------------------------------------------------------

    \23\ See supra note 6.
---------------------------------------------------------------------------

    A. Blue Tractor Letter I.\24\ The commenter opposes the proposed
rule change and raises the following concerns: \25\
---------------------------------------------------------------------------

    \24\ The Blue Tractor Letter I is available at https://www.sec.gov/comments/sr-nysearca-2018-04/nysearca201804-3004003-161880.pdf.
    \25\ Although the commenter purports to comment on the Notice,
the comments are more directly related to the Trust's December 4,
2017, exemptive application. See Fifth Amended and Restated
Application for an Order under Section 6(c) of the 1940 Act for
exemptions from various provisions of the 1940 Act and rules
thereunder (File No. 812-14405), dated December 4, 2017 (``Exemptive
Application''). The commenter also references concerns that it
raised in its comment letters to a similar, previous proposal filed
by the Exchange to list and trade Managed Portfolio Shares, which
the Exchange withdrew. See Securities Exchange Act Release No. 80553
(April 28, 2017), 82 FR 20932 (May 4, 2017) (``Prior Proposal'').
---------------------------------------------------------------------------

     Under the proposal, market participants will not be able
to engage in bona fide arbitrage or efficient statistical arbitrage to
keep the price of Shares close to a Fund's NAV; \26\
---------------------------------------------------------------------------

    \26\ The commenter also notes that market makers will not be
able to construct optimized tracking portfolios using the proposed
fund structure and cites to a comment letter that it filed in
response to the Prior Proposal. See Letter from Simon P. Goulet, Co-
Founder, Blue Tractor Group, LLC, to Brent J. Fields, Secretary,
Commission, dated November 22, 2017. This letter is available at
https://www.sec.gov/comments/sr-nysearca-201736/nysearca201736-2735961-161533.pdf.
---------------------------------------------------------------------------

     Funds can be reverse engineered to determine the
composition of the portfolio securities, which will make the Funds
susceptible to front-running;
     The proposed fund structure will result in asymmetric
disclosure of confidential portfolio information to selected parties;
     Details regarding the VIIV generation process, as well as
calculation engine verification procedures, are inadequate for market
participants and market makers;
     One second dissemination of VIIVs in a high frequency
trading environment is inadequate for authorized participants and
market makers and not of value to retail investors; and
     Requiring AP Representatives to obfuscate trades for
creation and redemption purposes in an effort to keep portfolio
composition confidential will delay execution and increase costs for
authorized participants.
    B. Blue Tractor Letter II.\27\ The commenter reiterates its concern
that the Funds can be reverse engineered to determine their trading
strategies and that ``predatory traders'' can use such information in
order to front run the Funds.
---------------------------------------------------------------------------

    \27\ The Blue Tractor Letter II is available at https://www.sec.gov/comments/sr-nysearca-2018-04/nysearca201804-3053961-161905.pdf.

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

    C. Broms Letter.\28\ The commenter opposes the proposed rule change
and raises the following concerns: \29\
---------------------------------------------------------------------------

    \28\ The Broms Letter is available at https://www.sec.gov/comments/sr-nysearca-2018-04/nysearca201804-3110868-161910.pdf.
    \29\ The commenter also generally references concerns that it
raised in its comment letters related to the Prior Proposal. See
Letter from Todd J. Broms, Chief Executive Officer, Broms & Company
LLC, to Brent J. Fields, Secretary, Commission, dated May 25, 2017,
available at https://www.sec.gov/comments/sr-nysearca-2017-36/nysearca201736.htm. See also Letter from Todd J. Broms, Chief
Executive Officer, Broms & Company LLC, to Brent J. Fields,
Secretary, Commission, dated June 27, 2016, available at https://www.sec.gov/comments/sr-nysearca-2016-08/nysearca201608-10.pdf.
---------------------------------------------------------------------------

     Selective disclosure of confidential portfolio information
to AP Representatives to trade on behalf of authorized participants
violates federal securities policy and facilitates illegal insider
trading;
     The portfolio holdings can be reverse engineered and
result in harm to the Funds' shareholders; and
     Because authorized participants cannot engage in bona fide
arbitrage, the Shares will not trade efficiently.
    D. Haeberle Letter.\30\ The commenter opposes the proposed rule
change and raises the following concerns: \31\
---------------------------------------------------------------------------

    \30\ The Haeberle Letter is available at https://www.sec.gov/comments/sr-nysearca-2018-04/nysearca201804-3110867-161909.pdf.
    \31\ The commenter also summarizes the main points of its letter
regarding the Prior Proposal. See Letter from Kevin S. Haeberle,
Associate Professor of Law, William & Mary Law School, to Brent J.
Fields, Secretary, Commission, dated December 15, 2017, available at
https://www.sec.gov/comments/sr-nysearca-2017-36/nysearca201736.htm.
---------------------------------------------------------------------------

     Selective disclosure of portfolio information to AP
Representatives, and the use of such information by AP Representatives
to engage in creations and redemptions, may violate Section 10(b) of
the Exchange Act and Rule 10b-5 thereunder; \32\
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78j; 17 CFR 240.10b-5.
---------------------------------------------------------------------------

     The proposal does not address how the Funds will ensure
that AP Representatives comply with representations and contractual
agreements to keep the Funds' portfolio securities confidential;
     Because AP Representatives will be required to obfuscate
the sale and purchase of portfolio securities for creations and
redemptions, they will be less likely to uphold their best execution
obligations to authorized participants;
     Any failure of best execution will frustrate efficient
market-making and arbitrage, leading to reduced liquidity in the
Shares; and
     AP Representative services will likely be costly and, due
to compliance constraints, few may offer such services, which will lead
to higher expenses for the Funds and reduced liquidity for the Shares.
    E. Gastineau Letter.\33\ The commenter opposes the proposed rule
change and raises the following concerns:
---------------------------------------------------------------------------

    \33\ The Gastineau Letter is available at https://www.sec.gov/comments/sr-nysearca-2018-04/nysearca201804-3201927-162011.pdf.
---------------------------------------------------------------------------

     The filing and other related documents are ``riddled with
demonstrably false statements of fact, unsubstantiated and misleading
expressions of opinion, and omissions of critical analysis and
disclosure. . . .''; \34\
---------------------------------------------------------------------------

    \34\ See Gastineau Letter, supra note 6, at 7.
---------------------------------------------------------------------------

     The portfolio holdings information can be uncovered by (1)
time-series analysis of the VIIV or other publicly disseminated Fund
information (reverse engineering), (2) observations of Confidential
Account trading, (3) misuse or misappropriation of Fund holdings
information communicated to AP Representatives, or (4) loss or theft of
confidential Fund holdings information communicated to AP
Representatives;
     By not assuring the protection of the Funds' proprietary
investment strategies, the proposal \35\ fails to demonstrate a public
purpose or to offer investors advantages over currently approved
structures;
---------------------------------------------------------------------------

    \35\ In his comment letter, the commenter defines the
``proposal'' as the Notice, the Exemptive Application, the
registration statement that the Trust filed on Form N-1A with
respect to the Funds (Registration Statement on Form N-1A for the
Trust, File Nos. 333-217142 and 811-23246, as filed on April 5,
2017), and certain comments on the Prior Proposal (see Letter from
Mark Criscitello, Chairman, Precidian Funds LLC, to Brent J. Fields,
Secretary, Commission, dated October 11, 2017; Letter from Daniel J.
McCabe, Chief Executive, Precidian Investments, to Brent J. Fields,
Secretary, Commission, dated October 12, 2017; and Letter from
Joseph A. Sullivan, Chairman and Chief Executive Officer, Legg
Mason, Inc., to Brent J. Fields, Secretary, Commission, dated
October 12, 2017, which are available at https://www.sec.gov/comments/sr-nysearca-2017-36/nysearca201736.htm). Accordingly, the
term ``proposal'' as used to describe the commenter's comment letter
refers to the same.
---------------------------------------------------------------------------

     The proposal violates the requirements for selective
disclosure in the 2004 adopting release to the N1-A Amendments and as
well as the principles of Regulation FD; \36\
---------------------------------------------------------------------------

    \36\ 17 CFR 243.100 et seq.
---------------------------------------------------------------------------

     The proposed disclosure of the Funds' portfolio holdings
on a daily basis to AP Representatives, Fund service providers, and
oversight authorities, and the lack of a surveillance or monitoring
program to ensure that the Funds' confidential information is protected
and not misused, facilitate illegal insider trading in the Funds'
portfolio securities to the detriment of the Funds' shareholders;
     The proposed Fund structure raises impediments to the
successful arbitrage of, and market making in, the Shares, especially
during volatile or stressed markets, because of: (1) The deficiencies
of VIIVs as intraday price signals, (2) market makers' forced reliance
on statistical arbitrage and related correlation-based hedging
techniques to manage their intraday exposures, and (3) the higher costs
and loss of execution control over transactions in Creation Basket
securities effected through the Confidential Accounts;
     The Shares will be more susceptible to trading halts
because even a minimal level of quote disruption in the portfolio
holdings will halt the Shares, which in turn will harm the Shares'
liquidity and trading efficiency;
     Fund shareholders will incur significant new costs,
liabilities, and risks in connection with the calculation and public
dissemination of the VIIVs and the selective private disclosure of the
Funds' confidential portfolio holdings information;
     The Shares will not trade efficiently because the Funds
will invest in small-cap stocks, illiquid assets, and ETFs potentially
holding foreign equities and/or less-liquid fixed income instruments;
     Information to investors is inadequate, and the Funds
should provide publicly available, enhanced real-time VIIVs, daily
closing market price and premium/discount based on the NAV, daily
intraday estimated premiums/discounts, and daily purchase and
redemption transaction fees; and
     (1) Widespread dissemination of the Funds' confidential
portfolio holdings on a daily basis and ``the absence of a discernible
program'' to protect the Funds' confidential information, and (2) the
``high likelihood'' that the Shares will trade at wider bid-ask spreads
and more variable premiums/discounts than existing active ETFs, render
the proposal inconsistent with the Section 6(b)(5) requirements that
Exchange rules must be designed to prevent fraudulent and manipulative
acts and practices, protect investors and the public interest, and not
to permit unfair discrimination among customers, issuers, brokers and
dealers.\37\
---------------------------------------------------------------------------

    \37\ In addition, the commenter believes that the proposal fails
to meet the statutory standards for exemptive relief pursuant to
Section 6(c) of the 1940 Act and asserts that the normal tax
benefits of ETF investing will likely not apply to the Funds.

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

III. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2018-04 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act \38\ to determine whether the proposed
rule change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule change.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Exchange Act,\39\ the
Commission is providing notice of the grounds for disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of the proposed rule change's consistency with
Section 6(b)(5) of the Exchange Act, which requires, among other
things, that the rules of a national securities exchange be ``designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, . . . to remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest.'' \40\
---------------------------------------------------------------------------

    \39\ Id.
    \40\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Exchange
Act, or the rules and regulations thereunder. Although there do not
appear to be any issues relevant to approval or disapproval that would
be facilitated by an oral presentation of views, data, and arguments,
the Commission will consider, pursuant to Rule 19b-4, any request for
an opportunity to make an oral presentation.\41\
---------------------------------------------------------------------------

    \41\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by May 23, 2018. Any person who wishes to file a rebuttal
to any other person's submission must file that rebuttal by June 6,
2018.
    The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice,\42\ the issues raised by the commenters, and any other
issues raised by the proposed rule change under the Exchange Act. In
particular, the Commission seeks commenters' views regarding the
concerns raised with respect to selective disclosure of confidential
portfolio information, namely, whether such disclosure is consistent
with the requirement of Section 6(b)(5) that the rules of the exchange
be designed to prevent fraudulent and manipulative acts and practices.
The Commission also seeks commenters' views regarding the various
concerns raised about how the Shares may trade in the secondary market,
including the potential for frequent trading halts and poor trading
performance during times of market volatility and stress. In this
regard, the Commission specifically seeks commenters' views on whether
the proposal is consistent with the maintenance of a fair and orderly
market.
---------------------------------------------------------------------------

    \42\ See supra note 3.
---------------------------------------------------------------------------

    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 protected]. Please include
File Number SR-NYSEArca-2018-04 on the subject line.

Paper Comments

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

All submissions should refer to File Numbers SR-NYSEArca-2018-04. 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 website (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 website 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 these filings also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2018-04 and should be submitted
on or before May 23, 2018. Rebuttal comments should be submitted by
June 6, 2018.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
---------------------------------------------------------------------------

    \43\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-09265 Filed 5-1-18; 8:45 am]
 BILLING CODE 8011-01-P