[Federal Register Volume 77, Number 220 (Wednesday, November 14, 2012)]
[Rules and Regulations]
[Pages 67771-67777]
[FR Doc No: 2012-27702]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2011-0985; FRL-9368-7]

Flonicamid; Pesticide Tolerances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes tolerances for residues of
flonicamid in or on Berry, low growing, subgroup 13-07G; Rapeseed
subgroup 20A, and cucumber. Interregional Research Project Number 4
(IR-4) requested these tolerances under the Federal Food, Drug, and
Cosmetic Act (FFDCA).

DATES: This regulation is effective November 14, 2012. Objections and
requests for hearings must be received on or before January 14, 2013,
and must be filed in accordance with the instructions provided in 40
CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: The docket for this action, identified by docket
identification (ID) number EPA-HQ-OPP-2011-0985, is available at http://www.regulations.gov or at the Office of Pesticide Programs

Regulatory Public Docket (OPP Docket) in the Environmental Protection
Agency Docket Center (EPA/DC), EPA West Bldg., Rm. 3334, 1301
Constitution Ave., NW., Washington, DC 20460-0001. The Public Reading
Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays. The telephone number for the Public Reading
Room is<PHONE_NUMBER>, and the telephone number for the OPP Docket is
(703) 305-5805. Please review the visitor instructions and additional
information about the docket available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Sidney Jackson, Registration Division
(7505P), Office of Pesticide Programs, Environmental Protection Agency,
1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone
number:<PHONE_NUMBER>; email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

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

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

    You may access a frequently updated electronic version of EPA's
tolerance regulations at 40 CFR part 180 through the Government
Printing Office's e-CFR site at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

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

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an
objection to any aspect of this regulation and may also request a
hearing on those objections. You must file your objection or request a
hearing on this regulation in accordance with the instructions provided
in 40 CFR part 178. To ensure proper receipt by EPA, you must identify
docket ID number EPA-HQ-OPP-2011-0985 in the subject line on the first
page of your submission. All objections and requests for a hearing must
be in writing, and must be received by the Hearing Clerk on or before
January 14, 2013. Addresses for mail and hand delivery of objections
and hearing requests are provided in 40 CFR 178.25(b).
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing (excluding any Confidential Business Information (CBI)) for
inclusion in the public docket. Information not marked confidential
pursuant to 40 CFR part 2 may be disclosed publicly by EPA without
prior notice. Submit the non-CBI copy of your objection or hearing
request, identified by docket ID number EPA-HQ-OPP-2011-0985, by one of
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave., NW., Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at http://www.epa.gov/dockets/contacts.htm.
Additional instructions on commenting or visiting the docket, along
with more information about dockets generally, is available at http://www.epa.gov/dockets.

II. Summary of Petitioned-For Tolerance

    In the Federal Register of Wednesday, March 14, 2012 (77 FR 15012)
(FRL-9335-9), EPA issued a document pursuant to FFDCA section
408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide
petition (PP 1E7842) by IR-4, IR-4 Project Headquarters, 500 College
Road East, Suite 201 W, Princeton, NJ 08540. The petition requested
that 40 CFR 180.613 be amended by establishing tolerances for combined
residues of the insecticide, flonicamid, N-(cyanomethyl)-4-
(trifluoromethyl)-3-pyridinecarboxamide and its metabolites TFNA, 4-
trifluoromethylnicotinic acid, TFNA-AM, 4-trifluoromethylnicotinamide,
TFNG, N-(4-trifluoromethylnicotinoyl)glycine, in or on cucumber at 1.3
parts per million (ppm), Berry, low growing subgroup 13-07G at 1.4 and
Rapeseed subgroup 20A at 1.5 ppm. That document referenced a summary of
the petition prepared by ISK Biosciences, the registrant, which is
available in the docket, http://www.regulations.gov. There were no
comments received in response to the notice of filing.
    Based upon review of the data supporting the petition and/or
current Agency policies, EPA has revised/modified the petitioned-for
flonicamid residue tolerance level in certain commodities and revised
the tolerance expression for flonicamid residues. EPA is also revising
the existing crop group tolerance on ``Vegetable, cucurbit, group 9''
to exclude cucumbers. The reasons for these changes are explained in
Unit IV.C.

III. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA determines that the tolerance is ``safe.'' Section
408(b)(2)(A)(ii) of FFDCA defines ``safe'' to mean that ``there is a
reasonable certainty that no harm will result from aggregate exposure
to the pesticide chemical residue, including all anticipated dietary
exposures and all other exposures for which there is reliable
information.'' This includes exposure through drinking water and in
residential settings, but does not include occupational exposure.
Section 408(b)(2)(C) of FFDCA requires EPA to give special
consideration to exposure of infants and children to the pesticide
chemical residue in establishing a tolerance and to ``ensure that there
is a reasonable certainty that no harm will result to infants and
children from aggregate exposure to the pesticide chemical residue * *
*.''
    Consistent with FFDCA section 408(b)(2)(D), and the factors
specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available
scientific data and other relevant information in support of this
action. EPA has sufficient data to assess the hazards of and to make a
determination on aggregate exposure for flonicamid including exposure
resulting from the tolerances established by this action. EPA's
assessment of exposures and risks associated with flonicamid follows.

A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered their
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.
    Flonicamid has low acute toxicity via the oral, inhalation and
dermal routes of exposure. Flonicamid is nonirritating to the eye and
skin and is not a dermal sensitizer. Its metabolites, TFNA, TFNA-AM,
TFNG, TFNG-AM, and TFNA-OH, also demonstrated low toxicity in acute
oral toxicity studies. In the 28-day dermal study with flonicamid
technical no dermal or systemic toxicity was seen at the limit dose. In
oral studies using rats and dogs, the kidney and liver are the target
organs for flonicamid toxicity. Increased kidney weight and hyaline
droplet deposition were observed as well as liver centrilobular
hypertrophy in the rat 28-day oral range-finding, 90-day oral,
developmental, and reproductive studies. The 90-day dog study showed
kidney tubular vacuolation as well as increased adrenal weights,
increased reticulocytes and decreased thymus weights. Increased
reticulocyte count was noted in both the subchronic and chronic dog
studies.
    In rats, developmental effects including increased incidence of
cervical ribs were observed at maternally toxic (liver and kidney gross
and histopathological effects) dose levels. In rabbits, developmental
effects were not observed at any dose level including maternally toxic
doses. Offspring effects (decreased body weight and delayed sexual
maturation) in the multi-generation study were seen only in the
presence of parental toxicity (kidney effects in males, blood effects
in females). Thus, there is no evidence that flonicamid results in
increased susceptibility (qualitative or quantitative) in in utero rats
or rabbits in the prenatal developmental studies or in young rats in
the 2-generation reproduction study.
    There are no concerns for flonicamid neurotoxicity. Although
clinical signs suggesting potential neurotoxic effects (e.g., decreased
motor activity, tremors) were seen in the acute and subchronic
neurotoxicity studies; other effects in these studies (e.g., increased
mortality, and significant decreases in food consumption and body
weight) indicated that the clinical signs were a result of the animals
being in an extreme condition or otherwise compromised and in a state
of general malaise. Also, these types of effects were not observed in
the other subchronic or chronic studies in mice, rats or dogs. Thus,
there is not clear evidence of neurotoxicity. Lastly, clear no-
observed-adverse-effect-levels (NOAELs) and lowest-observed-adverse-
effect-levels (LOAELs) were defined for the clinical signs, which are
above the levels currently used for risk assessment purposes.
Preliminary results of a 28-day oral (dietary) immunotoxicity study of
technical flonicamid in female CD-1 mice suggest that flonicamid is not
an immuno-suppressant, either structurally or functionally up to and
including dose levels exceeding the Limit Dose.
    Although there is some limited evidence suggesting that flonicamid
has a potential for carcinogenic effects, EPA determined that
quantification of risk using a non-linear approach (i.e., using a
chronic reference dose (cRfD)) adequately accounts for all chronic
toxicity, including carcinogenicity that could result from exposure to
flonicamid. The following considerations support that determination.
First, mutagenicity studies were negative for the parent chemical,
flonicamid, and its metabolites, TFNA, TFNA-AM, TFNG, TFNG-AM, and
TFNA-OH. Second, although flonicamid is carcinogenic in CD-1 mice,
based on increased incidences of lung tumors associated with Clara cell
activation, this tumor type is associated with species and strain
sensitivity and is not directly correlated with cancer risks in humans.
Third, nasal cavity tumors seen in male Wistar rats were linked to
incisor inflammation and not considered to be treatment related. These
tumor findings were confounded by the lack of a dose-response and the
biological significance is questionable.
    Specific information on the studies received and the nature of the
adverse effects caused by flonicamid as well as the NOAEL and the LOAEL
from the toxicity studies can be found at http://www.regulations.gov in
document, ``Flonicamid: Human Health Risk Assessment for the Proposed
Use on Low Growing Berry, Rapeseed, and Greenhouse Grown Cucumbers'' at
page 29 in docket ID number EPA-HQ-OPP-2011-0985.

B. Toxicological Points of Departure/Levels of Concern

    Once a pesticide's toxicological profile is determined, EPA
identifies toxicological points of departure (POD) and levels of
concern to use in evaluating the risk posed by human exposure to the
pesticide. For hazards that have a threshold below which there is no
appreciable risk, the toxicological POD is used as the basis for
derivation of reference values for risk assessment. PODs are developed
based on a careful analysis of the doses in each toxicological study to
determine the dose at which no adverse effects are observed (the NOAEL)
and the lowest dose at which adverse effects of concern are identified
(the LOAEL). Uncertainty/safety factors are used in conjunction with
the POD to calculate a safe exposure level--generally referred to as a
population-adjusted dose (PAD) or a reference dose (RfD)--and a safe
margin of exposure (MOE). For non-threshold risks, the Agency assumes
that any amount of exposure will lead to some degree of risk. Thus, the
Agency estimates risk in terms of the probability of an occurrence of
the adverse effect expected in a lifetime. For more information on the
general principles EPA uses in risk characterization and a complete
description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm.
    A summary of the toxicological endpoints for flonicamid used for
human risk assessment is shown in Table 1 of this unit.

  Table 1--Summary of Toxicological Doses and Endpoints for Flonicamid for Use in Human Health Risk Assessment
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                                   POD and uncertainty/   RfD, PAD, LOC for
        Exposure/scenario             safety factors       risk assessment      Study and toxicological effects
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Acute dietary (General population  None/NA.............  None/NA............  No toxicological effects seen in a
 including infants and children).                                              single dose study.
Chronic dietary (All populations)  NOAEL= 3.7 mg/kg/day  cRfD = 0.04 mg/kg/   2-Generation reproduction rat
                                   UFA = 10x...........   day.                 study.
                                   UFH = 10x...........  cPAD = 0.04 mg/kg/   Parental LOAEL = 22 mg/kg/day
                                   FQPA SF = 1x........   day.                 based on increased kidney
                                                                               weights, kidney hyaline
                                                                               deposition, increased blood serum
                                                                               LH (F1 females).

Cancer...........................  A nonlinear RfD approach was used to assess cancer risk.
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FQPA SF = Food Quality Protection Act Safety Factor. LOAEL = lowest-observed-adverse-effect-level. LOC = level
  of concern. mg/kg/day = milligram/kilogram/day. POD = Point of Departure. NOAEL = no-observed-adverse-effect-
  level. PAD = population adjusted dose (a = acute, c = chronic). RfD = reference dose. UF = uncertainty factor.
  UFA = extrapolation from animal to human (interspecies). UFH = potential variation in sensitivity among
  members of the human population (intraspecies).

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to flonicamid, EPA considered exposure under the petitioned-
for tolerances as well as all existing flonicamid tolerances in 40 CFR
180.613. EPA assessed dietary exposures from flonicamid in food as
follows:
    i. Acute exposure. Quantitative acute dietary exposure and risk
assessments are performed for a food-use pesticide, if a toxicological
study has indicated the possibility of an effect of concern occurring
as a result of a 1-day or single exposure. No such effects were
identified in the toxicological studies for flonicamid; therefore, a
quantitative acute dietary exposure assessment is unnecessary.
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment EPA used the food consumption data from the U.S. Department
of Agriculture (USDA) 1994-1996 and 1998 Continuing Service of Food
Intake by Individuals (CSFII). As to residue levels in food, EPA used
an unrefined chronic dietary assessment conducted assuming 100 percent
crop treated (PCT) estimates, tolerance-level residues for all
commodities, and empirical or Dietary Exposure Evaluation Model-Food
Commodity Intake Database (DEEM-FCIDTM) default processing
factors.
    iii. Cancer. EPA determines whether quantitative cancer exposure
and risk assessments are appropriate for a food-use pesticide based on
the weight of the evidence from cancer studies and other relevant data.
Cancer risk is quantified using a linear or nonlinear approach. If
sufficient information on the carcinogenic mode of action is available,
a threshold or nonlinear approach is used and a cancer RfD is
calculated based on an earlier noncancer key event. If carcinogenic
mode of action data are not available, or if the mode of action data
determine mutagenic mode of action, a default linear cancer slope
factor approach is utilized. Based on the data summarized in Unit
III.A., EPA has concluded that a nonlinear RfD approach is appropriate
for assessing cancer risk to flonicamid. Cancer risk was assessed using
the same exposure estimates as discussed in Unit III.C.1.ii., chronic
exposure.
    iv. Anticipated residue and PCT information. EPA did not use
anticipated residue and/or PCT information in the dietary assessment
for flonicamid. Tolerance-level residues and 100 PCT were assumed for
all food commodities.
    2. Dietary exposure from drinking water. The Agency used screening
level water exposure models in the dietary exposure analysis and risk
assessment for flonicamid in drinking water. These simulation models
take into account data on the physical, chemical, and fate/transport
characteristics of flonicamid. Further information regarding EPA
drinking water models used in pesticide exposure assessment can be
found at http://www.epa.gov/oppefed1/models/water/index.htm.
    The drinking water assessment was conducted using a parent only and
total toxic residues of flonicamid (flonicamid TTR) approach. Total
toxic residues include TFNA, TFNA-AM, TFNA-OH, TFNG, and TFNG-AM.
    Based on the Pesticide Root Zone Model/Exposure Analysis Modeling
System (PRZM/EXAMS) Screening Concentration in Ground Water (SCI-GROW)
models, the estimated drinking water concentrations (EDWCs) of total
toxic residues of flonicamid for chronic exposures for non-cancer
assessments are estimated to be 1.9 parts per billion (ppb) for surface
water and 0.00132 ppb for ground water.
    Modeled estimates of drinking water concentrations were directly
entered into the dietary exposure model. For chronic dietary risk
assessment, the water concentration of value 1.9 ppb was used to assess
the contribution to drinking water.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to non-occupational, non-dietary
exposure (e.g., for lawn and garden pest control, indoor pest control,
termiticides, and flea and tick control on pets). Flonicamid is
currently registered for the following uses that could result in non-
occupational exposures: Commercial ornamentals, interiorscapes, and
nurseries. However, these product labels do not allow use in home
gardens and greenhouses or in any residential settings. Therefore,
residential handler scenarios are not expected and need not be
assessed. Additionally, because no dermal toxicity endpoint was
identified for flonicamid, a post-application residential exposure/risk
assessment is not necessary. Post-application inhalation exposures are
expected to be negligible. Therefore, no residential exposure is
expected.
    Further information regarding EPA standard assumptions and generic
inputs for residential exposures may be found at http://www.epa.gov/pesticides/trac/science/trac6a05.pdf.
    4. Cumulative effects from substances with a common mechanism of
toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when
considering whether to establish, modify, or revoke a tolerance, the
Agency consider ``available information'' concerning the cumulative
effects of a particular pesticide's residues and ``other substances
that have a common mechanism of toxicity.''
    EPA has not found flonicamid to share a common mechanism of
toxicity with any other substances, and flonicamid does not appear to
produce a toxic metabolite produced by other substances. For the
purposes of this tolerance action, therefore, EPA has assumed that
flonicamid does not have a common mechanism of toxicity with other
substances. For information regarding EPA's efforts to determine which
chemicals have a common mechanism of toxicity and to evaluate the
cumulative effects of such chemicals, see EPA's Web site at http://www.epa.gov/pesticides/cumulative.

D. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA
shall apply

an additional tenfold (10X) margin of safety for infants and children
in the case of threshold effects to account for prenatal and postnatal
toxicity and the completeness of the database on toxicity and exposure
unless EPA determines based on reliable data that a different margin of
safety will be safe for infants and children. This additional margin of
safety is commonly referred to as the FQPA Safety Factor (SF). In
applying this provision, EPA either retains the default value of 10X,
or uses a different additional safety factor when reliable data
available to EPA support the choice of a different factor.
    2. Prenatal and postnatal sensitivity. The prenatal and postnatal
toxicity database for flonicamid includes prenatal developmental
toxicity studies in rats and rabbits and a multi-generation
reproduction toxicity study in rats. There is no evidence that
flonicamid results in increased susceptibility (qualitative or
quantitative) in in utero rats or rabbits in the prenatal developmental
studies or in young rats in the multi-generation reproduction study. No
developmental effects were seen in rabbits. In the multi-generation
reproduction study, developmental delays in the offspring (decreased
body weights, delayed sexual maturation) were seen only in the presence
of parental toxicity (kidney and blood effects). Also, there are clear
NOAELs and LOAELs for all effects. The degree of concern for prenatal
and/or post-natal susceptibility is, therefore, low due to the lack of
evidence of qualitative and quantitative susceptibility.
    3. Conclusion. EPA has determined that reliable data show the
safety of infants and children would be adequately protected if the
FQPA SF were reduced to 1X for chronic dietary and other exposures,
except as noted below. That decision is based on the following
findings:
    i. The toxicity database for flonicamid is complete except for an
immunotoxicity study and a subchronic inhalation study. Existing data
are sufficient for endpoint selection for exposure/risk assessment
scenarios, and for evaluation of the requirements under the FQPA.
Except for decreased thymus weights in the subchronic dog study, there
are no other indications in the available studies that organs
associated with immune function are affected by flonicamid, and
preliminary results of the above-mentioned immunotoxicity study
suggested that flonicamid is not an immunosuppressant. EPA does not
believe that the final results of the immunotoxicity study will result
in a dose less than the point of departure already used in this risk
assessment and an additional database uncertainty factor for potential
immunotoxicity does not need to be applied.
    A subchronic 28-day inhalation study is required and is outstanding
at this time. In the absence of a route specific inhalation study, EPA
has retained a 10X FQPA SF to assess risks for inhalation exposure
scenarios. However, residential inhalation exposures are not expected.
    ii. The available data base includes acute and subchronic
neurotoxicity studies. As discussed in Unit III.A., EPA has concluded
that the clinical signs observed in those studies were not the result
of a neurotoxic mechanism and that therefore a developmental
neurotoxicity study is not required.
    iii. There was no evidence for quantitative or qualitative
susceptibility following oral exposures to rats in utero or oral
exposure to rabbits in utero.
    iv. There are no residual uncertainties identified in the exposure
databases. An unrefined conservative chronic dietary exposure
assessment for food and drinking water was conducted, assuming
tolerance level residues for all existing and proposed commodities and
100 PCT of registered and proposed crops treated. The drinking water
assessment utilized water concentration values generated by models and
associated modeling parameters which are designed to produce
conservative, health protective, high-end estimates of water
concentrations which are not likely to be exceeded. The dietary (food
and drinking water) exposure assessment does not underestimate the
potential exposure for infants, children, or women of child bearing
age.

E. Aggregate Risks and Determination of Safety

    EPA determines whether acute and chronic dietary pesticide
exposures are safe by comparing aggregate exposure estimates to the
acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA
calculates the lifetime probability of acquiring cancer given the
estimated aggregate exposure. Short-, intermediate-, and chronic-term
risks are evaluated by comparing the estimated aggregate food, water,
and residential exposure to the appropriate PODs to ensure that an
adequate MOE exists.
    1. Acute risk. An acute aggregate risk assessment takes into
account acute exposure estimates from dietary consumption of food and
drinking water. An endpoint attributable to a single oral dose was not
identified in the toxicity database; therefore, flonicamid is not
expected to pose an acute risk.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that chronic exposure to
flonicamid from food and water will utilize 11% of the cPAD for the
general U.S. population and 28% of the cPAD for children 1 to 2 years
old, the population group receiving the greatest exposure. There are no
expected long-term residential exposures. Because drinking water
estimates have been combined with dietary exposures, the dietary
assessment discussed in Unit III.C.3., serves as the aggregate exposure
and risk assessment for flonicamid.
    3. Short-term and Intermediate-term risk. Short- and intermediate-
term aggregate exposures take into account short- and intermediate-term
residential exposures plus chronic exposure to food and water
(considered to be a background exposure level). Short- and
intermediate-term aggregate risk assessments were not conducted because
residential exposure is not expected from the use pattern proposed in
this registration request, or from any registered uses.
    4. Aggregate cancer risk for U.S. population. Based on the
discussion in Unit III.A., EPA has concluded that the cPAD is
protective of possible cancer effects.
    5. Determination of safety. Based on these risk assessments, EPA
concludes that there is a reasonable certainty that no harm will result
to the general population, or to infants and children from aggregate
exposure to flonicamid residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    Adequate enforcement methods are available to enforce the
tolerances for flonicamid and the major metabolites in plants and
livestock. The proposed method for plants uses Liquid Chromatography
with Tandem Mass Spectrometry (LC/MS/MS) (FMC No. P-3561M) to determine
the residues of flonicamid and its major metabolites, TFNA-AM, TFNA,
and TFNG.
    The method may be requested from: Chief, Analytical Chemistry
Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD
20755-5350; telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
B. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S.
tolerances with international standards whenever

possible, consistent with U.S. food safety standards and agricultural
practices. EPA considers the international maximum residue limits
(MRLs) established by the Codex Alimentarius Commission (Codex), as
required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint
United Nations Food and Agriculture Organization/World Health
Organization food standards program, and it is recognized as an
international food safety standards-setting organization in trade
agreements to which the United States is a party. EPA may establish a
tolerance that is different from a Codex MRL; however, FFDCA section
408(b)(4) requires that EPA explain the reasons for departing from the
Codex level.
    There are no Codex MRLs established on the proposed crops.

C. Revisions to Petitioned-For Tolerances

    Based on results from the Organization for Economic Cooperation and
Development (OECD) spreadsheet tolerance calculation procedures, EPA
modified certain IR-4 proposed tolerances for flonicamid residues. EPA
increased the proposed tolerance from 1.4 to 1.5 ppm for Berry, low
growing, subgroup 13-07G and from 1.3 to 1.5 ppm for cucumber. Because
there is an existing crop group tolerance for ``Vegetable, cucurbit,
group 9'' that applies to cucumbers, EPA, for the sake of clarity, is
revising that existing crop group tolerance to exclude cucumbers.
    Finally, EPA has revised the tolerance expression to clarify (1)
that, as provided in FFDCA section 408(a)(3), the tolerance covers
metabolites and degradates of flonicamid not specifically mentioned;
and (2) that compliance with the specified tolerance levels is to be
determined by measuring only the specific compounds mentioned in the
tolerance expression.

V. Conclusion

    Therefore, tolerances are established for the residues of
flonicamid, N-(cyanomethyl)-4-(trifluoromethyl)-3-pyridinecarboxamide,
and its metabolites TFNA (4- trifluoromethylnicotinic acid, TFNA-AM (4-
trifluoromethylnicotinamide) and TFNG, N-(4-
trifluoromethylnicotinoyl)glycine, in or on cucumber at 1.5 ppm; Berry,
low growing, subgroup 13-07G at 1.5 ppm; and Rapeseed subgroup 20A at
1.5 ppm. Additionally, the tolerance entry for Vegetable, cucurbit
group 9, is revised to exclude cucumber.

VI. Statutory and Executive Order Reviews

    This final rule establishes tolerances under FFDCA section 408(d)
in response to a petition submitted to the Agency. The Office of
Management and Budget (OMB) has exempted these types of actions from
review under Executive Order 12866, entitled ``Regulatory Planning and
Review'' (58 FR 51735, October 4, 1993). Because this final rule has
been exempted from review under Executive Order 12866, this final rule
is not subject to Executive Order 13211, entitled ``Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use'' (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled
``Protection of Children from Environmental Health Risks and Safety
Risks'' (62 FR 19885, April 23, 1997). This final rule does not contain
any information collections subject to OMB approval under the Paperwork
Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any
special considerations under Executive Order 12898, entitled ``Federal
Actions to Address Environmental Justice in Minority Populations and
Low-Income Populations'' (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established on the basis
of a petition under FFDCA section 408(d), such as the tolerances in
this final rule, do not require the issuance of a proposed rule, the
requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.), do not apply.
    This final rule directly regulates growers, food processors, food
handlers, and food retailers, not States or tribes, nor does this
action alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of FFDCA section 408(n)(4). As such, the Agency has determined that
this action will not have a substantial direct effect on States or
tribal governments, on the relationship between the national government
and the States or tribal governments, or on the distribution of power
and responsibilities among the various levels of government or between
the Federal Government and Indian tribes. Thus, the Agency has
determined that Executive Order 13132, entitled ``Federalism'' (64 FR
43255, August 10, 1999) and Executive Order 13175, entitled
``Consultation and Coordination with Indian Tribal Governments'' (65 FR
67249, November 9, 2000) do not apply to this final rule. In addition,
this final rule does not impose any enforceable duty or contain any
unfunded mandate as described under Title II of the Unfunded Mandates
Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.).
    This action does not involve any technical standards that would
require Agency consideration of voluntary consensus standards pursuant
to section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA) (15 U.S.C. 272 note).

VII. Congressional Review Act

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

List of Subjects in 40 CFR Part 180

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

    Dated: November 1, 2012.
Lois Rossi,
Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

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

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

0
2. Amend Sec.  180.613 as follows:
0
i. Revise the introductory text of paragraph (a)(1).
0
ii. Remove the entry ``Vegetable, cucurbit, group 9'' from the table in
paragraph (a)(1), and add alphabetically four new entries.
0
iii. Revise the introductory text of paragraph (a)(2).
    The added and revised text read as follows:

Sec.  180.613  Flonicamid; tolerances for residues.

    (a) * * * (1) Tolerances are established for the residues of the
insecticide flonicamid, including its metabolites and degradates, in or
on the commodities in the table below. Compliance with the tolerance
levels specified below is to be determined by measuring only the sum of
flonicamid, N-(cyanomethyl)-4-(trifluoromethyl)-3-pyridinecarboxamide,
and its metabolites, TFNA (4-trifluoromethylnicotinic acid), TFNA-AM
(4-trifluoromethylnicotinamide),

and TFNG, N-(4-trifluoromethylnicotinoyl)glycine, calculated as the
stoichiometric equivalent of flonicamid, in or on the following
commodities.

------------------------------------------------------------------------
                                                             Parts per
                        Commodity                             million
------------------------------------------------------------------------
Berry, low growing, subgroup 13-07G.....................             1.5
------------------------------------------------------------------------

                                * * * * *
------------------------------------------------------------------------
Cucumber................................................             1.5
------------------------------------------------------------------------

                                * * * * *
------------------------------------------------------------------------
Rapeseed subgroup 20A...................................             1.5
------------------------------------------------------------------------

                                * * * * *
------------------------------------------------------------------------
Vegetable, cucurbit, group 9, except cucumber...........             0.4
------------------------------------------------------------------------

                                * * * * *
------------------------------------------------------------------------

    (2) Tolerances are established for the residues of the insecticide
flonicamid, including its metabolites and degradates, in or on the
commodities in the table below. Compliance with the tolerance levels
specified below is to be determined by measuring only the sum of
flonicamid, N-(cyanomethyl)-4-(trifluoromethyl)-3-pyridinecarboxamide,
and its metabolites, TFNA (4-trifluoromethylnicotinic acid), and TFNA-
AM (4-trifluoromethylnicotinamide), calculated as the Stoichiometric
equivalent of flonicamid, in or on the following commodities.
* * * * *

[FR Doc. 2012-27702 Filed 11-13-12; 8:45 am]
BILLING CODE 6560-50-P


Assessing the Effect of Five Gasoline Properties on Exhaust Emissions from Light-Duty Vehicles certified to Tier-2 Standards

                       Analysis of Data from EPA Phase 3

                                (EPAct/V2/E-89)

                                 Appendix I.1f
                              Final Model Fitting
                       Total Hydrocarbons (THC) (Bag 3)

No. Observations:			956
No. Vehicles:		  		  15
No. censored measurements:		    2
No. missing measurements:		    0
No. measurements removed:		    0
Model Type:				Mixed model

I.1f.1   Model fitting with respect to the 11-term design model.
Design Model (11-terms):  Bayesian Information Criterion (BIC) vs. number of terms in model (p) for all possible models respecting hierarchy.

Design Model (11-terms):  Bayesian Information Criterion (BIC) vs. number of terms in model (p) for all possible models respecting hierarchy (CLOSEUP of previous figure).

Design Model (11-terms):  Bayesian Information Criterion (BIC) vs. number of terms in model (p) for all possible models respecting hierarchy (CLOSEUP of previous figure).

THC (Bag 3):  Number of terms (p), Goodness-of-fit (BIC) and terms included in the 35 best-fitting candidate models (out of a total of 294 possible models with hierarchy).  (Terms included in models ranked 1-9 comprise the "superset" for final model-fitting).

      Models fit for THC (Bag 3): (all models include an intercept term).
Model Term
                                   Notation
                                     Model

                                   Superset
                                    SM2[1]
                                      SM4

                                    SM5[2]
                                     etOH
Ze
                                      ●
                                      ●
                                      ●

                                      x
                                     Arom
Za
                                      ●
                                      ●
                                      ●

                                      ●
                                      RVP
Zr
                                      ●
                                      ●
                                      x

                                      ●
                                      T50
Z5
                                      ●
                                      ●
                                      ●

                                      ●
                                      T90
Z9
                                      ●
                                      ●
                                      ●

                                      ●
                                 etOH x etOH
ZZee
                                      ●
                                      x

                                  T50 x T50
ZZ55
                                      ●
                                      x

                                 etOH x Arom
ZZea
                                      ---
                                      ---
                                      ---

                                      ---
                                  etOH x RVP
ZZer
                                      ●
                                      ●
                                      x

                                      x
                                  etOH x T50
ZZe5
                                      ●
                                      ●
                                      ●

                                      x
                                  etOH x T90
ZZe9
                                      ---
                                      ---
                                      ---

                                      ---

[1] Represents "Superset minus 2," etc.
[2] Not nested within SM4; test with respect to SM2.

 THC (Bag 3): Model fitting history, starting with the 10-term superset model.
                                Fit Parameters

                             Test with respect to
                                Previous Model
Model
                                                                              p
-2lnL
BIC[1]

                                                                           Dev.
                                                                              d
                                                                    Pr>χ[2]
Superset
                                                                             10
527.403
559.900

SM2[2]
                                                                              8
530.138
557.218

                                                                          2.735
                                                                              2
                                                                          0.255
SM4
                                                                              6
556.555
534.890

                                                                          4.753
                                                                              2
                                                                         0.0929

SM5
                                                                              5
562.345
543.388

                                                                         13.250
                                                                              3
                                                                        0.00413

[1] A lower value indicates a better fit.
[2] Best fit with respect to the 11-term design model.
[3] Not nested within SM4; test with respect to SM2.

THC (Bag 3): Coefficients and Tests of Effect for the Superset and Reduced Models, with respect to the 11-term design model.

I.1f.2	Model Fitting with respect to the 16-term extended Model.
Extended Model (16-terms):  Bayesian Information Criterion (BIC) vs. number of terms in model (p) for all possible models respecting hierarchy.

Extended Model (16-terms):  Bayesian Information Criterion (BIC) vs. number of terms in model (p) for subset of models respecting hierarchy (CLOSEUP of previous figure).

 Extended Model (16-terms):  Bayesian Information Criterion (BIC) vs. number of terms in model (p) for subset of models respecting hierarchy (CLOSEUP of previous figure).

THC (Bag 3):  Number of terms (p), Goodness-of-fit (BIC) and terms included in the 35 best-fitting candidate models (out of a total of 2,964 possible models with hierarchy).  (Terms included in models ranked 1-9 comprise the "superset" for final model-fitting).

NOTE:  Model fitting for 16-term extended model has results identical to that for the 11-term design model, as presented above.


[Federal Register Volume 82, Number 190 (Tuesday, October 3, 2017)]
[Notices]
[Pages 46106-46111]
[FR Doc No: 2017-21161]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81737; File No. SR-NYSEArca-2017-112]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the GraniteShares
Palladium Trust Under NYSE Arca Rule 8.201-E

September 27, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on September 12, 2017, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to list and trade shares of the GraniteShares
Palladium Trust under NYSE Arca Equities Rule 8.201 [sic]. The proposed
change is available on the Exchange's Web site at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the
GraniteShares Palladium Trust (the ``Trust''), under NYSE Arca Equities
Rule 8.201.\4\ Under NYSE Arca Equities Rule 8.201 [sic], the Exchange
may propose to list and/or trade pursuant to unlisted trading
privileges (``UTP'') Commodity-Based Trust Shares.\5\
---------------------------------------------------------------------------

    \4\ On September 8, 2017, the Trust submitted to the Commission
its draft registration statement on Form S-1 (the ``Registration
Statement'') under the Securities Act of 1933 (15 U.S.C. 77a)
(``Securities Act''). The Jumpstart Our Business Startups Act,
enacted on April 5, 2012, added Section 6(e) to the Securities Act.
Section 6(e) of the Securities Act provides that an ``emerging
growth company'' may confidentially submit to the Commission a draft
registration statement for confidential, non-public review by the
Commission staff prior to public filing, provided that the initial
confidential submission and all amendments thereto shall be publicly
filed not later than 21 days before the date on which the issuer
conducts a road show, as such term is defined in Securities Act Rule
433(h)(4). An emerging growth company is defined in Section 2(a)(19)
of the Securities Act as an issuer with less than $1,000,000,000
total annual gross revenues during its most recently completed
fiscal year. The Trust meets the definition of an emerging growth
company and consequently has submitted its Form S-1 Registration
Statement on a confidential basis with the Commission.
    \5\ Commodity-Based Trust Shares are securities issued by a
trust that represents investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
Trust.
---------------------------------------------------------------------------

    The Trust will not be registered as an investment company under the
Investment Company Act of 1940, as amended,\6\ and is not required to
register under such act. The Trust is not a commodity pool for purposes
of the Commodity Exchange Act, as amended.\7\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 80a-1.
    \7\ 17 U.S.C. 1.
---------------------------------------------------------------------------

    The Sponsor of the Trust is GraniteShares LLC, a Delaware limited
liability company. The Bank of New York Mellon is the trustee of the
Trust (the ``Trustee'') \8\ and ICBC Standard Bank PLC is the custodian
of the Trust (the ``Custodian'').\9\
---------------------------------------------------------------------------

    \8\ The Trustee is responsible for the day-to-day administration
of the Trust. The responsibilities of the Trustee include (1)
processing orders for the creation and redemption of Baskets; (2)
coordinating with the Custodian the receipt and delivery of
palladium transferred to, or by, the Trust in connection with each
issuance and redemption of Baskets; (3) calculating the net asset
value of the Trust on each business day; and (4) selling the Trust's
palladium as needed to cover the Trust's expenses. The Trust does
not have a Board of Directors or persons acting in a similar
capacity.
    \9\ The Custodian is responsible for safekeeping the palladium
owned by the Trust. The Custodian is appointed by the Trustee and is
responsible to the Trustee under the Trust's palladium custody
agreements. The Custodian will facilitate the transfer of palladium
in and out of the Trust through the unallocated palladium accounts
it may maintain for each Authorized Participant or unallocated
palladium accounts that may be maintained for an Authorized
Participant by another palladium-clearing bank approved by the
London Palladium and Palladium Market (``LPPM''), and through the
unallocated palladium account it will maintain for the Trust. The
Custodian is responsible for allocating specific bars of palladium
to the Trust Allocated Account. As used herein, ``Trust Allocated
Account'' means the loco London account established in the name of
the Trustee and maintained for the benefit of the Trust by the
Custodian on an allocated basis pursuant to a written custody
agreement between the Trustee and the Custodian. The Custodian will
provide the Trustee with regular reports detailing the palladium
transfers in and out of the Trust Unallocated Account with the
Custodian and identifying the palladium bars held in the Trust
Allocated Account.

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

    The Commission has previously approved listing on the Exchange
under NYSE Arca Equities Rule 8.201 [sic] of other precious metals and
palladium-based commodity trusts, including the ETFS Platinum
Trust,\10\ the ETFS Palladium Trust,\11\ and the Sprott Physical
Platinum and Palladium Trust.\12\
---------------------------------------------------------------------------

    \10\ Securities Exchange Act Release No. 61219 (December 22,
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
    \11\ Securities Exchange Act Release No. 61220 (December 22,
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
    \12\ Securities Exchange Act Release No. 68430 (December 13,
2012), 77 FR 75239 (December 13, 2012) (SR-NYSEArca-2012-111).
---------------------------------------------------------------------------

    The Exchange represents that the Shares satisfy the requirements of
NYSE Arca Equities Rule 8.201 [sic] and thereby qualify for listing on
the Exchange.\13\
---------------------------------------------------------------------------

    \13\ With respect to the application of Rule 10A-3 (17 CFR
240.10A-3) under the Act, the Trust relies on the exemption
contained in Rule 10A-3(c)(7).
---------------------------------------------------------------------------

Operation of the Trust \14\
    The investment objective of the Trust will be for the Shares to
reflect the performance of the price of palladium, less the expenses
and liabilities of the Trust. The Trust will issue Shares which
represent units of fractional undivided beneficial interest in and
ownership of the Trust.
---------------------------------------------------------------------------

    \14\ The description of the operation of the Trust, the Shares
and the palladium market contained herein are based, in part, on the
Registration Statement. See note 4, supra.
---------------------------------------------------------------------------

    The Trust will not trade in palladium futures or options on any
futures exchange or over the counter (``OTC'') transactions in
forwards, options and other derivatives. The Trust will not hold or
trade in commodity futures contracts, ``commodity interests'', or any
other instruments regulated by the Commodities Exchange Act. The Trust
will take delivery of physical palladium that complies with the LPPM
palladium delivery rules.
    The Shares are intended to constitute a simple and cost-effective
means of making an investment similar to an investment in palladium.
Although the Shares are not the exact equivalent of an investment in
palladium, they provide investors with an alternative that allows a
level of participation in the palladium market through the securities
market.
Operation of the Palladium Market
    The global trade in palladium consists of OTC transactions in spot,
forwards, and options and other derivatives, together with exchange-
traded futures and options.
    Most trading in physical palladium is conducted on the OTC market,
predominantly in Zurich and London. The LPPM coordinates various OTC
market activities, including clearing and vaulting, acts as the
principal intermediary between physical palladium market participants
and the relevant regulators, promotes good trading practices and
develops standard market documentation. In addition, the LPPM promotes
refining standards for the palladium market by maintaining the
``London/Zurich Good Delivery List,'' which are the lists of LPPM
accredited melters and assayers of palladium.
    The basis for settlement and delivery of a spot trade is payment
(generally in US dollars) two business days after the trade date
against delivery. Delivery of the palladium can either be by physical
delivery or through the clearing systems to an unallocated account. The
unit of trade in London and Zurich is the troy ounce, whose conversion
between grams is: 1,000 grams is equivalent to 32.1507465 troy ounces,
and one troy ounce is equivalent to 31.1034768 grams.
    A good delivery palladium plate or ingot is acceptable for delivery
in settlement of a transaction on the OTC market (a ``Good Delivery
Palladium Plate or Ingot''). A Good Delivery Palladium Plate or Ingot
must contain between 32 and 192 troy ounces of palladium with a minimum
fineness (or purity) of 999.5 parts per 1,000 (99.95%), be of good
appearance, and be easy to handle and stack. A Good Delivery Palladium
Plate or Ingot must also bear the stamp of one of the melters and
assayers who are on the LPPM approved list. Unless otherwise specified,
the palladium spot price always refers to the ``Good Delivery
Standards'' set by the LPPM.
Creation and Redemption of Shares
    The Trust will create and redeem Shares on a continuous basis in
one or more blocks of 15,000 Shares (a block of 15,000 Shares is called
a ``Basket''). As described below, the Trust will issue Shares in
Baskets to certain authorized participants (``Authorized
Participants'') on an ongoing basis. Baskets of Shares will only be
issued or redeemed in exchange for an amount of palladium represented
by the aggregate number of Shares redeemed. No Shares will be issued
unless the Custodian has allocated to the Trust's account the
corresponding amount of palladium. Initially, a Basket will require
delivery of 1,500 fine ounces of palladium. The amount of palladium
necessary for the creation of a Basket, or to be received upon
redemption of a Basket, will decrease over the life of the Trust, due
to the payment or accrual of fees and other expenses or liabilities
payable by the Trust.
    Baskets may be created or redeemed only by Authorized Participants.
Orders must be placed by 3:59 p.m. Eastern Time (``E.T.''). The day on
which a Trust receives a valid purchase or redemption order is the
order date.
    Each Authorized Participant must be a registered broker-dealer, a
participant in Depository Trust Corporation (``DTC''), have entered
into an agreement with the Trustee (the ``Authorized Participant
Agreement'') and have established a palladium unallocated account with
the Custodian or a physical palladium clearing bank. The Authorized
Participant Agreement provides the procedures for the creation and
redemption of Baskets and for the delivery of palladium in connection
with such creations or redemptions.
    According to the Registration Statement, Authorized Participants
may surrender Baskets of Shares in exchange for the corresponding
Basket Amount announced by the Trustee. Upon surrender of such Shares
and payment of the Trustee's applicable fee and of any expenses, taxes
or charges (such as stamp taxes or stock transfer taxes or fees), the
Trustee will deliver to the order of the redeeming Authorized
Participant the amount of palladium corresponding to the redeemed
Baskets. Shares can only be surrendered for redemption in Baskets of
15,000 Shares each.
    Before surrendering Baskets of Shares for redemption, an Authorized
Participant must deliver to the Trustee a written request indicating
the number of Baskets it intends to redeem. The date the Trustee
receives that order determines the Basket Amount to be

received in exchange. However, orders received by the Trustee after
3:59 p.m. E.T. on a business day or on a business day when the LBMA
Palladium Price PM or other applicable benchmark price is not
announced, will not be accepted.
    The redemption distribution from the Trust will consist of a credit
to the redeeming Authorized Participant's unallocated account
representing the amount of the palladium held by the Trust evidenced by
the Shares being redeemed as of the date of the redemption order.
Net Asset Value
    The NAV of the Trust will be calculated by subtracting the Trust's
expenses and liabilities on any day from the value of the palladium
owned by the Trust on that day; the NAV per Share will be obtained by
dividing the NAV of the Trust on a given day by the number of Shares
outstanding on that day. On each day on which the Exchange is open for
regular trading, the Trustee will determine the NAV as promptly as
practicable after 4:00 p.m. E.T. The Trustee will value the Trust's
palladium based on the most recently announced LBMA Palladium Price PM
or LBMA Palladium Price AM. If neither price is available for that day,
the Trustee will value the Trust's palladium based on the most recently
announced LBMA Palladium Price PM or LBMA Palladium Price AM. If the
Sponsor determines that such price is inappropriate to use, the Sponsor
will identify an alternate basis for evaluation to be employed by the
Trustee. Further, the Sponsor may instruct the Trustee to use on an on-
going basis a different publicly available price which the Sponsor
determines to fairly represent the commercial value of the Trust's
palladium.
    The NAV per Share will be calculated by taking the current price of
the Trust's total assets, subtracting any liabilities, and dividing by
the total number of Shares outstanding. Authorized Participants will
offer Shares at an offering price that will vary, depending on, among
other factors, the price of palladium and the trading price of the
Shares on the Exchange at the time of offer. Authorized Participants
will not receive from the Trust, the Sponsor, the Trustee or any of
their affiliates any fee or other compensation in connection with the
offering of the Shares.
Secondary Market Trading
    While the Trust seeks to reflect generally the performance of the
price of palladium less the Trust's expenses and liabilities, Shares
may trade at, above or below their NAV. The NAV of Shares will
fluctuate with changes in the market value of the Trust's assets. The
trading prices of Shares will fluctuate in accordance with changes in
their NAV as well as market supply and demand. The amount of the
discount or premium in the trading price relative to the NAV may be
influenced by non-concurrent trading hours between the major palladium
markets and the Exchange. While the Shares trade on the Exchange until
4:00 p.m. E.T., liquidity in the market for palladium may be reduced
after the close of the major world palladium markets, including London,
Zurich and COMEX. As a result, during this time, trading spreads, and
the resulting premium or discount, on Shares may widen.
Availability of Information Regarding Palladium
    Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity such as palladium over
the Consolidated Tape. However, there will be disseminated over the
Consolidated Tape the last sale price for the Shares, as is the case
for all equity securities traded on the Exchange (including exchange-
traded funds). In addition, there is a considerable amount of
information about palladium and palladium markets available on public
Web sites and through professional and subscription services.
    Investors may obtain palladium pricing information on a 24-hour
basis based on the spot price for an ounce of palladium from various
financial information service providers, such as Reuters and Bloomberg.
    Reuters and Bloomberg provide at no charge on their Web sites
delayed information regarding the spot price of palladium and last sale
prices of palladium futures, as well as information about news and
developments in the palladium market. Reuters and Bloomberg also offer
a professional service to subscribers for a fee that provides
information on palladium prices directly from market participants. ICAP
plc provides an electronic trading platform called EBS for the trading
of spot palladium, as well as a feed of real-time streaming prices,
delivered as record-based digital data from the EBS platform to its
customer's market data platform via Bloomberg or Reuters.
    Complete real-time data for palladium futures and options prices
traded on the COMEX are available by subscription from Reuters and
Bloomberg. The NYMEX also provides delayed futures and options
information on current and past trading sessions and market news free
of charge on its Web site. There are a variety of other public Web
sites providing information on palladium, ranging from those
specializing in precious metals to sites maintained by major
newspapers, such as The Wall Street Journal.
Availability of Information
    The intraday indicative value (``IIV'') per Share for the Shares
will be disseminated by one or more major market data vendors at least
every 15 seconds during the Core Trading Session. The IIV will be
calculated based on the amount of palladium held by the Trust and a
price of palladium derived from updated bids and offers indicative of
the spot price of palladium.\15\
---------------------------------------------------------------------------

    \15\ The IIV on a per Share basis disseminated during the Core
Trading Session should not be viewed as a real-time update of the
NAV, which is calculated once a day.
---------------------------------------------------------------------------

    The Web site for the Trust (www.graniteshares.com) will contain the
following information, on a per Share basis, for the Trust: (a) The
mid-point of the bid-ask price \16\ at the close of trading (``Bid/Ask
Price''), and a calculation of the premium or discount of such price
against such NAV; and (b) data in chart format displaying the frequency
distribution of discounts and premiums of the Bid/Ask Price against the
NAV, within appropriate ranges, for each of the four previous calendar
quarters. The Web site for the Trust will also provide the Trust's
prospectus. Finally, the Trust's Web site will provide the prior day's
closing price of the Shares as traded in the U.S. market. In addition,
information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume
information for the Shares will be published daily in the financial
section of newspapers.
---------------------------------------------------------------------------

    \16\ The bid-ask price of the Shares will be determined using
the highest bid and lowest offer on the Consolidated Tape as of the
time of calculation of the closing day NAV.
---------------------------------------------------------------------------

Criteria for Initial and Continued Listing
    The Trust will be subject to the criteria in NYSE Arca Equities
Rule 8.201(e) [sic] for initial and continued listing of the Shares.
    A minimum of one Basket or 15,000 Shares will be required to be
outstanding at the start of trading, which is equivalent to 1,500 fine
ounces of palladium. The Exchange believes that the anticipated minimum
number of Shares outstanding at the start of

trading is sufficient to provide adequate market liquidity.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus
rendering trading in the Trust subject to the Exchange's existing rules
governing the trading of equity securities. Trading in the Shares on
the Exchange will occur in accordance with NYSE Arca Equities Rule
7.34(a). The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions. As provided in NYSE Arca
Equities Rule 7.6, Commentary .03, the minimum price variation
(``MPV'') for quoting and entry of orders in equity securities traded
on the NYSE Arca Marketplace is $0.01, with the exception of securities
that are priced less than $1.00 for which the MPV for order entry is
$0.0001.
    Further, NYSE Arca Equities Rule 8.201 [sic] sets forth certain
restrictions on ETP Holders acting as registered Market Makers in the
Shares to facilitate surveillance. Under NYSE Arca Equities Rule
8.201(g) [sic], an ETP Holder acting as a registered Market Maker in
the Shares is required to provide the Exchange with information
relating to its trading in the underlying palladium, related futures or
options on futures, or any other related derivatives. Commentary .04 of
NYSE Arca Equities Rule 6.3 requires an ETP Holder acting as a
registered Market Maker, and its affiliates, in the Shares to
establish, maintain and enforce written policies and procedures
reasonably designed to prevent the misuse of any material nonpublic
information with respect to such products, any components of the
related products, any physical asset or commodity underlying the
product, applicable currencies, underlying indexes, related futures or
options on futures, and any related derivative instruments (including
the Shares).
    As a general matter, the Exchange has regulatory jurisdiction over
its ETP Holders and their associated persons, which include any person
or entity controlling an ETP Holder. A subsidiary or affiliate of an
ETP Holder that does business only in commodities or futures contracts
would not be subject to Exchange jurisdiction, but the Exchange could
obtain information regarding the activities of such subsidiary or
affiliate through surveillance sharing agreements with regulatory
organizations of which such subsidiary or affiliate is a member.
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) The extent to which conditions in the underlying palladium
market have caused disruptions and/or lack of trading, or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\17\ The Exchange will halt trading in the Shares if the
NAV of the Trust is not calculated or disseminated daily. The Exchange
may halt trading during the day in which an interruption occurs to the
dissemination of the IIV, as described above. If the interruption to
the dissemination of the IIV persists past the trading day in which it
occurs, the Exchange will halt trading no later than the beginning of
the trading day following the interruption.
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    \17\ See NYSE Arca Equities Rule 7.12.
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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.\18\ 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.
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    \18\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
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    The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Shares from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares from markets and other entities that
are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.\19\
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    \19\ For a list of the current members of ISG, see
www.isgportal.org.
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    Also, pursuant to NYSE Arca Equities Rule 8.201(g) [sic], the
Exchange is able to obtain information regarding trading in the Shares
and the underlying palladium, palladium futures contracts, options on
palladium futures, or any other palladium derivative, through ETP
Holders acting as registered Market Makers, in connection with such ETP
Holders' proprietary or customer trades through ETP Holders which they
effect on any relevant market.
    In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
    All statements and representations made in this filing regarding
(a) the description of the portfolio, (b) limitations on portfolio
holdings or reference assets, or (c) the applicability of Exchange
listing rules specified in this rule filing shall constitute continued
listing requirements for listing the Shares of the Trust on the
Exchange.
    The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Trust to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Trust is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Equities Rule 5.5(m).
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (1) The procedures for
purchases and redemptions of Shares in Baskets (including noting that
Shares are not individually redeemable); (2) NYSE Arca Equities Rule
9.2(a), which imposes a duty of due diligence on its ETP Holders to
learn the essential facts

relating to every customer prior to trading the Shares; (3) how
information regarding the IIV is disseminated; (4) the requirement that
ETP Holders deliver a prospectus to investors purchasing newly issued
Shares prior to or concurrently with the confirmation of a transaction;
(5) the possibility that trading spreads and the resulting premium or
discount on the Shares may widen as a result of reduced liquidity of
palladium trading during the Core and Late Trading Sessions after the
close of the major world palladium markets; and (6) trading
information. For example, the Information Bulletin will advise ETP
Holders, prior to the commencement of trading, of the prospectus
delivery requirements applicable to the Trust. The Exchange notes that
investors purchasing Shares directly from the Trust (by delivery of the
Creation Basket Deposit) will receive a prospectus. ETP Holders
purchasing Shares from the Trust for resale to investors will deliver a
prospectus to such investors.
    In addition, the Information Bulletin will reference that the Trust
is subject to various fees and expenses as will be described in the
Registration Statement. The Information Bulletin will also reference
the fact that there is no regulated source of last sale information
regarding physical palladium, that the Commission has no jurisdiction
over the trading of palladium as a physical commodity, and that the
CFTC has regulatory jurisdiction over the trading of palladium futures
contracts and options on palladium futures contracts.
    The Information Bulletin will also discuss any relief, if granted,
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \20\ that an exchange have rules that
are 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, in general, to protect investors and the public interest.
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    \20\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Equities Rule 8.201
[sic]. The Exchange has in place surveillance procedures that are
adequate to properly monitor trading in the Shares in all trading
sessions and to deter and detect violations of Exchange rules and
applicable federal securities laws. The Exchange may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement.
    The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that there is a considerable amount of palladium price and palladium
market information available on public Web sites and through
professional and subscription services. Investors may obtain palladium
pricing information on a 24-hour basis based on the spot price for an
ounce of palladium from various financial information service
providers. Delayed information regarding the spot price of palladium
and last sale prices of palladium futures, as well as information about
news and developments in the palladium market, are also available from
financial information service providers. Information on palladium
prices directly from market participants is also available from
financial information service providers. An electronic trading platform
called EBS for the trading of spot palladium, as well as a feed of
real-time streaming prices, is also available from information service
providers.
    The NAV of the Trust will be published by the Sponsor on each day
that the NYSE Arca is open for regular trading and will be posted on
the Trust's Web site. The IIV relating to the Shares will be widely
disseminated by one or more major market data vendors at least every 15
seconds during the Core Trading Session. The Trust's Web site will also
provide the Trust's prospectus, as well as the two most recent reports
to stockholders. In addition, information regarding market price and
trading volume of the Shares will be continually available on a real-
time basis throughout the day on brokers' computer screens and other
electronic services. Information regarding the previous day's closing
price and trading volume information for the Shares will be published
daily in the financial section of newspapers.
    The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of exchange-traded product that will enhance
competition among market participants, to the benefit of investors and
the marketplace. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares and may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement. In addition, as noted above, investors will have ready
access to information regarding palladium pricing.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes the
proposed rule change will enhance competition by accommodating Exchange
trading of an additional exchange-traded product relating to physical
palladium.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2017-112 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 Number SR-NYSEArca-2017-112. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2017-112, and
should be submitted on or before October 24, 2017.
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    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21161 Filed 10-2-17; 8:45 am]
 BILLING CODE 8011-01-P