[Federal Register Volume 79, Number 13 (Tuesday, January 21, 2014)]
[Notices]
[Page 3427]
[FR Doc No: 2014-00987]

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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-408, OMB Control No. 3235-0464]

Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.

Extension:
    Rule 101.

    Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') has submitted to the Office of Management
and Budget (``OMB'') a request for approval of extension of the
previously approved collection of information provided for in Rule 101
of Regulation M (17 CFR 242.101), under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.).
    Rule 101 prohibits distribution participants from purchasing
activities at specified times during a distribution of securities.
Persons otherwise covered by this rule may seek to use several
applicable exceptions such as a calculation of the average daily
trading volume of the securities in distribution, the maintenance of
policies regarding information barriers between their affiliates, and
the maintenance of a written policy regarding general compliance with
Regulation M for de minimus transactions.
    There are approximately 1762 respondents per year that require an
aggregate total of 34,525 hours to comply with this rule. Each
respondent makes an estimated 1 annual response. Each response takes on
average approximately 19.594 hours to complete. Thus, the total
compliance burden per year is 34,525 burden hours. The total estimated
internal labor compliance cost for the respondents is approximately
$2,175,075.00, resulting in a cost of compliance for each respondent
per response of approximately $1234.435 (i.e., $2,175,075.00/1762
responses).
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
    The public may view the background documentation for this
information collection at the following Web site: www.reginfo.gov.
Comments should be directed to: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503 or by sending an email to<EMAIL_ADDRESS>and (ii) Thomas Bayer, Director/Chief Information
Officer, c/o Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549
or by sending an email to<EMAIL_ADDRESS>Comments must be
submitted within 30 days of this notice.

    Dated: January 14, 2014.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00987 Filed 1-17-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: November 2, 2006 (Volume 71, Number 212)]
[Notices]
[Page 64590-64594]
[DOCID:fr02no06-84]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54657; File No. SR-CHX-2006-29]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto Relating to Participant Fees and Credits

 October 26, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on September 29, 2006, the Chicago Stock Exchange, Inc. (``CHX''
or ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the CHX. On October
20, 2006, the CHX filed Amendment No. 1 to the proposed rule change.\3\
The CHX has designated this

proposal as one establishing or changing a member due, fee, or other
charge imposed by the CHX under Section 19(b)(3)(A)(ii) of the Act,\4\
and Rule 19b-4(f)(2) thereunder,\5\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change, as
amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 made technical changes to correct the
marking of the proposed rule text and made clarifying changes to the
discussion in the purpose section. Amendment No. 1 made no changes
to the proposed fees as set forth in the original filing.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The CHX proposes to revise its Schedule of Participant Fees and
Credits (``Fee Schedule'') to provide for fees, charges and credits
contemplated by the Exchange's new trading model being implemented by
the CHX this fall. The text of the proposed rule change is available on
the CHX's Web site (http://www.chx.com/rules/proposed_rules.htm), at

the principal office of the CHX, 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 CHX included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The CHX has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.

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

1. Purpose
    Throughout 2006, the Exchange has been working on the design and
development of a new trading model centered around a core matching
system that will provide for fully automated electronic matching of
orders (``Matching System''), as well as corresponding rules and
regulatory initiatives. On September 29, 2006, the Exchange's proposed
rules relating to the new trading model were approved by the
Commission.\6\ The Exchange anticipates making the transition to its
new trading model commencing the week of October 23, 2006. As further
detailed in SR-CHX-2006-05, the Exchange's new trading model differs
from the current CHX structure in several notable ways. First, the CHX
will no longer operate from a traditional physical exchange floor, but
rather will operate an entirely electronic facility. Second, the CHX
will no longer maintain a specialist program, in which specialists
maintain books of orders in designated issues.\7\ Finally, as noted
above, orders will be matched by a fully automated Matching System.\8\
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    \6\ See Securities Exchange Act Release No. 54550 (September 29,
2006); 71 FR 59563 (October 10, 2006) (SR-CHX-2006-05) (referred to
as the ``NTM Approval Order'').
    \7\ In the new trading model, Participants may register as
either market makers or institutional brokers (formerly known as
floor brokers), or may simply operate as unregistered order-sending
firms that route orders to the CHX for execution.
    \8\ The CHX new trading model does contemplate special handling
of orders by CHX institutional brokers, but all such orders must be
entered by institutional brokers into an electronic functionality
known as Brokerplex. Brokered orders must clear the Matching System
prior to execution and must otherwise be executed in accordance with
the rules set forth in new CHX Article 17, which governs
institutional brokers, as well as applicable law, including
Regulation NMS.
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    This fundamental shift in the Exchange's trading model necessitates
certain changes in the Exchange's business model, including the fees,
charges and credits that it assesses its participants
(``Participants''). After significant deliberation, including a
comprehensive review of other self-regulatory organizations and their
respective billing structures, the Exchange has formulated a revised
Fee Schedule that the Exchange believes more closely resembles the fee
structures that have been implemented in connection with other
electronic trading facilities.
    Summarized below are the provisions of the Fee Schedule that will
change from the previous version. To facilitate an orderly transition
to the new trading model, the Fee Schedule contemplates charging
Participants under current rates, with new Fee Schedule provisions to
become applicable as issues are transitioned to the new trading model
and become eligible for trading in the Matching System. The Fee
Schedule delineates which fees will be ``phased out'' during and after
the transition to the new trading model.
    Participant Access & Registration (Sections A-D)
     Permit Fees: In connection with the Exchange's
demutualization on February 9, 2005, the Exchange's rules were amended
to require that each Participant hold at least one Trading Permit in
order to access the CHX.\9\ The Exchange's Fee Schedule was amended to
provide for annual Trading Permit fees in lieu of annual member dues;
the amount of the Trading Permit Annual Fee ($6,000) was identical to
the amount of member dues immediately prior to demutualization. Trading
Permit fees have not increased for nearly two years, since the
demutualization transaction.
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    \9\ See Securities Exchange Act Release No. 51149 (February 8,
2005), 70 FR 7531 (February 14, 2005) (SR-CHX-2004-26). Prior to
demutualization, the Exchange's rules provided for access by
``members'' who owned or leased CHX ``seats.'' The demutualization
rule changes provide for access by ``Participants'' who hold
``trading permits.''
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    Pursuant to a recent proposed rule change (the ``Trading Permit
Rule Changes''), each Participant Firm will be required to hold only
one Trading Permit per firm, regardless of the number of its registered
representatives.\10\ These rule changes reflect the Exchange's
transition from a floor-based exchange (where it was appropriate to
require multiple Trading Permits if a Participant Firm had multiple
representatives on the CHX floor) to an electronic facility (where all
Participant Firms have equivalent electronic access to the Exchange's
facilities).
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    \10\ See Securities Exchange Act Release No. 54494 (September
25, 2006); 71 FR 58023 (October 2, 2006) (SR-CHX-2006-23). The
Exchange believes that the Trading Permit Rule Changes will provide
for an even more equitable allocation of fees among Exchange
Participants, because no firm will be required to bear a
disproportionate share of total Trading Permit fees by holding
multiple Trading Permits. Instead, each Participant's Trading Permit
fee will be identical, because each Participant will only hold one
Trading Permit.
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    The revised proposed Fee Schedule provides that the annual fee for
each Trading Permit will increase from $6,000 to $7,200 for each
Trading Permit purchased or renewed after October 1, 2006. The Trading
Permit cancellation fee will increase to the lesser of $2,400 or $600
per month for the remainder of the one-year term of the permit,
effective with the renewal of each Trading Permit after October 1,
2006.\11\
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    \11\ See Section A of the Fee Schedule.
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    The CHX believes that these changes to the Trading Permit fee
structure are reasonable under the circumstances. The Trading Permit
Annual Fee has not increased for some time, warranting a modest
increase. Moreover, the Trading Permit Rule Changes will result in
aggregate savings to CHX Participants.\12\
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    \12\ Although not all CHX Participant firms will realize savings
due to a reduction in the number of Trading Permits, total Trading
Permit fees will be reduced substantially. In order to offset a
portion of this aggregate reduction, the Exchange believes that the
proposed modest increase in annual Trading Permit fees is
appropriate.
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    With respect to the Trading Permit cancellation fee, as set forth
in previous proposed rule changes relating to charges for cancellation
of Trading

Permits,\13\ the CHX believes that it is reasonable to provide for some
fee relief for Participants whose trading permits are cancelled
intrayear. The Exchange also believes, however, that it is necessary
for the Exchange to have an adequate basis on which to budget and
project annual revenues. Accordingly, the Exchange believes that a
Trading Permit cancellation fee, including a modest increase thereof,
remains appropriate.
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    \13\ See Securities Exchange Act Release No. 52815 (November 21,
2005), 70 FR 71572 (November 29, 2005) (SR-CHX 2005-31); Securities
Exchange Act Release No. 54495 (September 25, 2006), 71 FR 58025
(October 2, 2006) (SR-CHX-2006-27) (providing for a cancellation fee
in the event a Trading Permit is cancelled intrayear).
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     SRO Fee: This fee will increase from $100/month to $250/
month. This fee will be assessed per Trading Permit.\14\ As set forth
above with respect to Trading Permit fees, this slight increase in the
per permit fee is offset by the aggregate savings that will be achieved
by CHX Participants due to the new ``one firm, one permit'' rule made
effective by the Trading Permit Rule Changes.
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    \14\ See Section B of the Fee Schedule.
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     Registration Fees: The CHX will continue to assess a $500
annual fee for each trader who is engaged in proprietary securities
trading for an off-Exchange Participant Firm that is solely a CHX
Participant and for which the CHX is the Designated Examining Authority
(``DEA'').\15\ This fee will be pro-rated in the first year of a
trader's registration, based on the quarter in which that registration
occurs.\16\
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    \15\ See Section C of the Fee Schedule.
    \16\ This provision formerly provided for a $500 initial
registration fee and $500 annual fee (with no proration for partial
years) for each off-floor trader who was engaged in proprietary
securities trading for a Participant Firm for which the CHX is the
DEA. Given the elimination of the $500 initial registration fee and
the addition of the proration language, the changes to this
provision will result in net savings by affected Participant Firms.
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    Other changes to Section C of the Fee Schedule reflect the
transition away from a floor-based trading environment, with references
to the floor modified to reflect access to the Exchange's facilities.
The fee for floor clerks has also been eliminated.
     Matching System Port Charges: The revised proposed Fee
Schedule provides for a port charge of $400 per month for each
Participant connection to the Matching System, other than connections
through the Brokerplex functionality that is used by CHX institutional
brokers.\17\ This fee is a new addition to the Fee Schedule and
reflects the Exchange's transition to a fully-electronic trading
platform instead of a floor-based market. The Exchange believes that,
in the new trading model, the port charge provides a reasonable means
of allocating a portion of Matching System expenses to those
Participant Firms that maintain connectivity to the Matching
System.\18\
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    \17\ See Section D of the Fee Schedule. Section D formerly
contained provisions relating to assignment of issues to CHX
specialists. This process will no longer occur because all
specialist issues are being migrated to the new trading model.
Accordingly, all former text of Section D has been deleted in its
entirety.
    \18\ The former Fee Schedule allocated a portion of these costs
by means of various MAX-related connectivity charges, which will be
eliminated for issues as they migrate from MAX (the Exchange's
current semi-automated execution platform) to the new trading model.
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Transaction and Order Routing Fees (Section E)

    Transaction fees will be modified in several ways as the Exchange
transitions to its new trading model.\19\
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    \19\ See Section E of the Fee Schedule.
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     Matching System: Section E of the Fee Schedule sets forth
the transaction fees that will be charged for executions in the
Matching System once it is operative, including Matching System routing
fees. This section also contains an odd-lot Matching System transaction
fee, which is charged to the Participant that submits the odd-lot order
to the Matching System. The Exchange believes that the new transaction
fees for the Matching System are fair and reasonable, particularly in
light of the fee structures implemented in connection with other
electronic facilities. The Exchange believes that the ``take/provide''
model has become a widely-recognized industry model, and the Exchange's
rates are in line with other similarly-situated market centers.
    To facilitate an orderly transition, Section E.7 of the Fee
Schedule preserves the pre- new trading model fee structure, which will
continue to provide the basis for transaction and order processing fees
if an issue is not yet traded in the Matching System, but will no
longer be applicable once an issue transitions to the new trading model
and is available for trading in the Matching System. Section E.7 of the
Fee Schedule also contains a new provision establishing a charge for
outbound ITS or NMS Linkage Plan orders.\20\
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    \20\ This provision is necessary in order to implement the CHX's
participation in the exchange-to-exchange billing arrangement
associated with the ``Plan for the Purpose of Creating and Operating
an Intermarket Communications Linkage Pursuant to Section
11A(a)(3)(B) of the Securities Exchange Act of 1934'' (``Linkage
Plan''), which took effect on October 1, 2006. See Securities
Exchange Act Release No. 54548 (September 29, 2008), 71 FR 59159
(October 6, 2006) (SR-CHX-2006-28) (approving Linkage Plan exchange-
to-exchange billing procedures); Securities Exchange Act Release No.
54551 (September, 2006), 71 FR 59148 (October 6, 2006) (approving
Linkage Plan). When an outbound Linkage Plan commitment is executed
on another Linkage Participant market, such market will directly
invoice the CHX for a transaction fee equal to the transaction fee
that it would charge its own member for such an execution. The CHX
is then responsible for payment of such invoice. The new CHX Fee
Schedule provision permits the CHX to collect a corresponding fee
from the Participant who generated the outbound Linkage Plan
commitment.
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     Institutional Broker Agency Fees: Section E.3 of the Fee
Schedule outlines the fees that will be charged to the Participant Firm
that executes an order through an institutional broker, if the broker
facilitates the execution of the order on the Exchange or in another
market over ITS or any later linkage plan. These fees have not changed
from the fees set forth in Section F.4(e) and (f) of the previous Fee
Schedule; only their location within the Fee Schedule has changed.\21\
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    \21\ Reference to ``floor'' broker also has changed to
``institutional'' broker.
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Credits (Section F)

    The Exchange's credit structure has been revised to adjust for the
new trading model as well as Regulation NMS, which impacts allocation
and payment of market data fees.\22\
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    \22\ See Section F of the Fee Schedule.
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     Institutional Brokers: In lieu of the previous formula
used for floor broker credits, which incorporated significant variables
including market data fees, each institutional broker will be eligible
for a monthly transaction fee credit equal to 18% of the transaction
fees received by the Exchange each month for agency trades executed
through the institutional broker.\23\
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    \23\ This new institutional broker credit replaces the former
floor broker credit provision set forth in Section M.2 of the
previous Fee Schedule.
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     Specialist Credits: These credits will continue to be
available to specialists in issues that they trade as specialist during
the transition to the new trading model.\24\ As an issue moves into the
Matching System for trading, specialist credits will be pro-rated or
eliminated for that issue, based on the date that the issue becomes
eligible for trading in the Matching System. Specialists (or other
eligible Participants) who elect to register as market makers in the
new trading model may then earn market data rebates for liquidity-
providing trades or crosses submitted to the Matching System.
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    \24\ Formerly set forth in Section M.1, the specialist credit
provisions are unchanged and will remain in place until an issue
migrates to the new trading model.
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     Market Data Rebates for Matching System Trades: Each
Participant Firm \25\

will be eligible for a tape credit, applied on a quarterly basis, equal
to 50% of monthly tape revenue from the Consolidated Tape Association
(less all direct CTA costs) generated by liquidity-providing trades or
crosses submitted to the Matching System by a Participant Firm in a
particular Tape A or Tape B security. By its terms, this credit is not
available unless an issue has migrated to the Matching System.
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    \25\ Institutional brokers are not eligible to receive tape
credits; they are instead eligible for the transaction fee credits
previously described.
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    The terms of this credit are identical to the terms of the
Specialist Credit discussed above. However, the CHX has added a
provision indicating that tape credits will be applied on a quarterly
basis, after the Exchange receives its payments from the reporting
plans.\26\ The identical nature of the credits is intentional. As set
forth above, the Specialist Credit is available until an issue migrates
to the CHX Matching System, at which point Specialist Credits will no
longer be available,\27\ but the former specialist (or another eligible
Participant) may receive a Market Data Rebate in lieu of the Specialist
Credit, on account of liquidity-providing trades or crosses submitted
to the Matching System.
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    \26\ The Exchange has also added a provision indicating that the
tape credit will be based on the tape revenue generated by
liquidity-providing trades or Crosses submitted to the Matching
System by the Participant Firm. (emphasis added). Telephone
conversation between Kathleen Boege, Vice President and Associate
General Counsel, CHX, Joseph Morra, Special Counsel, Division of
Market Regulation (``Division''), Commission, and Sara Gillis,
Attorney, Division, Commission, on October 24, 2006.
    \27\ There will no longer be a specialist assigned to such
issue.
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     Other Credit Provisions: Section F.4 of the Fee Schedule,
relating to Two-Sided Quote Providers, remains unchanged but has been
relocated from former Section M.4. Section F.5 of the Fee Schedule,
governing unavailability of credits if a Participant's payment to the
Exchange is more than 60 days past due, also is unchanged from the
version that became effective shortly before this Fee Schedule was
submitted.\28\
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    \28\ See Securities Exchange Act Release No. 54522 (September
27, 2006), 71 FR 58456 (October 3, 2006) (SR-CHX-2006-26).
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Co-Location Fees (Section G)

    These provisions have not changed; they merely have been relocated
from former Section H to current Section G of the Fee Schedule.

Clearing Support Fees (Section H)

    There are no changes to this section, which formerly was Section I
of the Fee Schedule, except that the Exchange is deleting provisions
relating to CUSIP fees.

Listing Fees (Section I)

    There are no substantive changes to this section, which formerly
was Section J.

Market Regulation and Market Surveillance Fees (Section J)

    There are no changes to this section, which formerly was Section K
of the Fee Schedule, except that the provision relating to DEA
Examination Fees has been modified to delete a footnote relating to
exemptions and to clarify that the charge is assessed per Participant
Firm.

Specialist Fixed Fees (Section K)

    These provisions have not changed with respect to calculation of
the aggregate fixed fees; they merely have been relocated from former
Section E to current Section K of the Fee Schedule. This provision has
also been modified to reflect the transition to the new trading model
and to provide a basis for pro rating the fixed fees as issues migrate
to the new trading model over the next several months. Fixed fees will
continue to be charged for issues traded by CHX specialists; once an
issue migrates to the new trading model and is no longer traded by a
CHX specialist, the fixed fee due from the specialist for that month
will be prorated based on the transition date.

Space Charges (Section L)

    The rule changes relating to the new trading model provide that the
Exchange will no longer be considered to have a physical trading floor
from a regulatory perspective, although the current trading floor space
will remain available for leasing by Participants (and ultimately
perhaps by non-Participants). During the transitional period this fall,
the existing billing structure for booth space, post space and
electrical or structural modifications to such space will remain in
place, through December 31, 2006. After that date, any applicable space
charges will be incorporated into separate lease agreements between the
Exchange and entities that lease space on the Exchange's former trading
floor.\29\ The Exchange is in the process of finalizing its
comprehensive space plan for the former trading floor, including the
terms under which it will offer space for lease to Participants. These
terms, and corresponding lease documentation, will be available for
consideration by Participants later this fall.
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    \29\ See Section L of the Fee Schedule.
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Equipment, Information Services & Technology Charges (Section M)

    As with space charges, these fees will remain in place until
December 31, 2006. Except as set forth below, there are no substantive
changes to this section. Most changes are intended to delete obsolete
provisions relating to the Exchange's former OTC specialist program.
     Broker Connectivity Charge/Credit: All network and
connectivity charges are rebilled monthly to institutional brokers that
access the network, based on the proportion of each firm's use of the
network during the month.\30\ Until completion of the new trading model
rollout, institutional brokers will be eligible for a monthly network/
connectivity fee credit, equal to a total monthly credit of $15,000,
allocated among institutional broker firms based on each firm's
respective percentage of total monthly transaction fee credits.\31\
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    \30\ See Section M of the Fee Schedule.
    \31\ See Section F.2 of the Fee Schedule for a description of
this credit.
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Supplies, Rulebooks and Reports (Section N)

    This section includes two new charges:
     Brokerplex Report Charge: There will be a charge of $50
per month to provide reports of Participant Firm activity, by
trader.\32\
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    \32\ See Section N.3 of the Fee Schedule.
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     Trade and order data: This charge is intended to help the
Exchange defray the expenses of responding to Participants' data
requests, which often require significant customization and other
accommodation of specific requests.\33\
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    \33\ See Section N.4 of the Fee Schedule.
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Late Fees (Section O)

    These provisions have not changed; they merely have been relocated
from former Section N to current Section O of the Fee Schedule.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b)(4) of the Act \34\ in that it provides for the
equitable allocation of reasonable dues, fees and other charges among
its members and is in line with other self-regulatory organizations
that have implemented trading platforms similar to the CHX new trading
model.
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    \34\ 15 U.S.C. 78f(b)(4).
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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.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change establishes or changes a
member due, fee, or other charge imposed by the Exchange, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \35\ and Rule 19b-
4(f)(2) \36\ thereunder. At any time within 60 days of the filing of
such proposed rule change, the Commission may summarily abrogate such
rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.\37\
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    \35\ 15 U.S.C. 78s(b)(3)(A).
    \36\ 17 CFR 19b-4(f)(2).
    \37\ For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission considers the period
to commence on October 20, 2006, the date on which the CHX filed
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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 e-mail to<EMAIL_ADDRESS>Please include

File No. SR-CHX-2006-29 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CHX-2006-29. This file
number should be included on the subject line if e-mail 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 inspection and
copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the CHX. 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-CHX-2006-29 and should be submitted on or before
November 24, 2006.
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    \38\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\38\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-18481 Filed 11-1-06; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 162 (Wednesday, August 21, 2019)]
[Rules and Regulations]
[Pages 43510-43517]
[FR Doc No: 2019-17993]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2018-0201; FRL-9997-14]

C1-C4 Linear and Branched Chain Alkyl D-
Glucitol Dianhydro Alkyl Ethers; Exemption From the Requirement of a
Tolerance

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes exemptions from the requirement of
a tolerance for residues of pesticide inert ingredients within the
C1-C4 linear and branched chain alkyl d-glucitol
dianhydro alkyl ethers (AD-GDAE) cluster. These exemptions are being
established with the following terms: When used as an inert ingredient
(solvent, co-solvent, viscosity modifier and adjuvant) in pesticide
formulations applied to growing crops and raw agricultural commodities
after harvest, on animals, and in antimicrobial formulations applied to
food-contact surfaces in public-eating places, dairy-processing
equipment, and food-processing equipment, and utensils, and in
antimicrobial formulations used for dairy processing equipment, and
food-processing equipment and utensils. Exponent, Inc., on behalf of
Croda, Inc., submitted a petition to EPA under the Federal Food, Drug,
and Cosmetic Act (FFDCA), requesting establishment of an exemption from
the requirement of a tolerance. This regulation eliminates the need to
establish a maximum permissible level for residues of C1-
C4 linear and branched chain alkyl d-glucitol dianhydro
alkyl ethers cluster when used in accordance with the terms of these
exemptions.

DATES: This regulation is effective August 21, 2019. Objections and
requests for hearings must be received on or before October 21, 2019,
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-2018-0201, 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), West William Jefferson Clinton 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<PHONE_NUMBER>. Please review the visitor instructions and
additional information about the docket available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Michael L. Goodis, Registration
Division (7505P), Office of Pesticide Programs, Environmental
Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-
0001; main telephone number:

(703) 305-7090; 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 40 CFR
part 180 through the Government Publishing Office's e-CFR site at
http://www.ecfr.gov/cgi-bin/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-2018-0201 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
October 21, 2019. 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-2018-0201, by one of
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be CBI or other
information whose disclosure is restricted by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at http://www.epa.gov/dockets/contacts.html.
    Additional instructions on commenting or visiting the docket, along
with more information about dockets generally, is available at http://www.epa.gov/dockets.

II. Petition for Exemption

    In the Federal Register of October 18, 2018 (83 FR 52787) (FRL-
9984-21), EPA issued a document pursuant to FFDCA section 408, 21
U.S.C. 346a, announcing the filing of a pesticide petition (PP IN-
11109) by Exponent, Inc. (1150 Connecticut Ave, Suite 1100, NW,
Washington, DC 20036), on behalf of Croda, Inc. (315 Cherry Lane New
Castle, DE 19720). The petition requested that 40 CFR be amended by
establishing exemptions from the requirement of a tolerance for
residues of C1-C4 linear and branched chain alkyl d-glucitol dianhydro
alkyl ethers (C1-C4 Linear and Branched Chain AD-GDAE) cluster--d-
glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl-(CAS Reg. No. 5306-85-4);
d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-ethyl- (CAS Reg. No. 30915-81-
2); d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-propyl) (CAS Reg. No.
107644-13-3); d-glucitol, 1,4:3,6-dianhydro-2,5-bis-O-(1-methylethyl)-
,(iso-propyl diether) (CAS Reg. No. 103594-41-8); d-glucitol, 1,4:3,6-
dianhydro-2,5-di-O-butyl- (CAS Reg. No. 103594-42-9); d-glucitol,
1,4:3,6-dianhydro-2,5-di-O-(1-methylpropyl)-, (CAS Reg. No. not
assigned); and d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-(2-methylpropyl)-
, (CAS Reg. No. not assigned) when used as an inert ingredient
(solvent, co-solvent, viscosity modifier and adjuvant) in pesticide
formulations applied to growing crops and raw agricultural commodities
after harvest under 40 CFR 180.910, applied in or on animals under 40
CFR 180.930, in antimicrobial formulations used in food-contact
surfaces in public-eating places, dairy-processing equipment, and food-
processing equipment and utensils under 40 CFR 180.940(a) and in
antimicrobial formulations used for dairy-processing equipment, and
food-processing equipment and utensils under 40 CFR 180.940(b). That
document referenced a summary of the petition prepared by Exponent,
Inc. on behalf of Croda, Inc., the petitioner, which is available in
the docket, http://www.regulations.gov. Although one comment was
submitted in response to the relating to notice of filing regarding the
use of pesticides generally, it was not specific to tolerances or this
rulemaking.

III. Inert Ingredient Definition

    Inert ingredients are all ingredients that are not active
ingredients as defined in 40 CFR 153.125 and include, but are not
limited to, the following types of ingredients (except when they have a
pesticidal efficacy of their own): Solvents such as alcohols and
hydrocarbons; surfactants such as polyoxyethylene polymers and fatty
acids; carriers such as clay and diatomaceous earth; thickeners such as
carrageenan and modified cellulose; wetting, spreading, and dispersing
agents; propellants in aerosol dispensers; microencapsulating agents;
and emulsifiers. The term ``inert'' is not intended to imply
nontoxicity; the ingredient may or may not be chemically active.
Generally, EPA has exempted inert ingredients from the requirement of a
tolerance based on the low toxicity of the individual inert
ingredients.

IV. Aggregate Risk Assessment and Determination of Safety

    Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an
exemption from the requirement for 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. . . .''

    EPA establishes exemptions from the requirement of a tolerance only
in those cases where it can be clearly demonstrated that the risks from
aggregate exposure to pesticide chemical residues under reasonably
foreseeable circumstances will pose no appreciable risks to human
health. In order to determine the risks from aggregate exposure to
pesticide inert ingredients, the Agency considers the toxicity of the
inert in conjunction with possible exposure to residues of the inert
ingredient through food, drinking water, and through other exposures
that occur as a result of pesticide use in residential settings. If EPA
is able to determine that a finite tolerance is not necessary to ensure
that there is a reasonable certainty that no harm will result from
aggregate exposure to the inert ingredient, an exemption from the
requirement of a tolerance may be established.
    Consistent with FFDCA section 408(c)(2)(A), and the factors
specified in FFDCA section 408(c)(2)(B), 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 C1-C4
linear and branched chain alkyl d-glucitol dianhydro alkyl ethers
cluster including exposure resulting from the exemption established by
this action. EPA's assessment of exposures and risks associated with
C1-C4 linear and branched chain alkyl d-glucitol
dianhydro alkyl ethers cluster 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. Specific information on the studies received and the nature
of the adverse effects caused by C1-C4 linear and
branched chain alkyl d-glucitol dianhydro alkyl ethers cluster as well
as the no-observed-adverse-effect-level (NOAEL) and the lowest-
observed-adverse-effect-level (LOAEL) from the toxicity studies are
discussed in this unit.
    The seven compounds included in the cluster are C1-
C4 linear and branched chain glucitol, 1,4:3,6-dianhydro
ether congeners of isosorbide, which is described as a fused ring
furo[3,2-b]furan, d-glucitol heterocycle. These chemicals are similar
in structure and are expected to be similar in regard to toxicity
profile. Therefore, d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl- was
selected as a suitable analogue to represent toxicity due to exposure
to the seven compounds included in the cluster and all toxicological
studies were conducted with d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-
methyl-.
    The acute oral and dermal toxicities are low in rats and rabbits,
respectively. C1-C4 linear and branched chain
alkyl d-glucitol dianhydro alkyl ethers are not irritating to the skin
or eyes in the rabbit. Acute inhalation and sensitization studies are
not available for review.
    New Zealand white rabbits exposed for 8 days via gavage to doses as
high as 300 mg/kg/day of d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl-
do not exhibit adverse effects. No adverse effects are observed up to
375 mg/kg/day in rats following 13 weeks of exposure via gavage to d-
glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl-. Conversely, adverse
effects are observed in the dog following 13 weeks of exposure via
capsule to d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl-. Decreased
mean body weight, body weight gain, food consumption, changes in
clinical biochemistry, lower levels of red blood cells (RBCs),
hemoglobin and hematocrit and decreased relative liver weights are
observed in dogs at 700 mg/kg/day. The no-observed-adverse-effect level
(NOAEL) is 100 mg/kg/day.
    No fetal susceptibility is observed in the developmental toxicity
studies in rats and rabbits. Developmental studies with d-glucitol,
1,4:3,6-dianhydro-2,5-di-O-methyl-in the rat and rabbit show no
maternal or developmental adverse effects up to 375 and 300 mg/kg/day,
respectively, the highest doses tested. No reproduction toxicity
studies are available for review, however, no evidence of toxicity to
reproductive organs is observed in the 13-week oral toxicity studies in
the rat or dog up to 375 and 700 mg/kg/day, respectively.
    The Ames test and chromosomal aberrations assay in human
lymphocytes are negative. Therefore, d-glucitol, 1,4:3,6-dianhydro-2,5-
di-O-methyl- is not considered mutagenic.
    D-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl- is not expected to
be carcinogenic based on a Derek Nexus structural alert analysis. No
structural alerts for carcinogenicity or mutagenicity are indicated in
the analysis.
    Neurotoxicity and immunotoxicity studies are not available for
review. However, no evidence of neurotoxicity and immunotoxicity is
observed in the submitted studies.
    Metabolism studies are not available for the C1-
C4 linear and branched chain alkyl d-glucitol dianhydro
alkyl ethers cluster. However, based on the classical metabolic
pathways for the alkyl and aryl etherases, it is expected that the
C1-C4 linear and branched chain alkyl d-glucitol
dianhydro alkyl ethers cluster would be metabolized to monoethers,
isosorbide (the common and major metabolite), and sorbitol.

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.
    The 13-week oral toxicity study in dogs is selected for the chronic
dietary exposure scenario as well as intermediate-term incidental oral,
dermal and inhalation exposure scenarios. The NOAEL is 100 mg/kg/day,
and the LOAEL is 700 mg/kg/day based on decreased mean body weight,
body weight gain and food consumption, changes in clinical
biochemistry, lower levels of RBCs, hemoglobin and hematocrit and
decreased relative liver weights. This represents the lowest NOAEL in
the database in the most sensitive species. The developmental studies
in rats and rabbits are selected for short-term exposure scenarios.
These studies are considered co-critical, the NOAEL is 300 mg/kg/day,
the highest dose tested.

The standard inter- and intra-species uncertainty factors of 10x are
applied; as discussed below in Unit IV.D., the Agency applied a 1x Food
Quality Protection Act (FQPA) Safety Factor (SF). The default factor of
100% is applied for the dermal absorption rate and the inhalation
absorption rate.

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to C1-C4 linear and branched chain alkyl
d-glucitol dianhydro alkyl ethers cluster, EPA considered exposure
under the proposed exemption from the requirement of a tolerance. EPA
assessed dietary exposures from C1-C4 linear and
branched chain alkyl d-glucitol dianhydro alkyl ethers cluster in food
as follows:
    No adverse effects attributable to a single exposure of endpoint
was identified for d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl-;
therefore, an acute dietary exposure assessment was not conducted.
    In conducting the chronic dietary exposure assessment using the
Dietary Exposure Evaluation Model DEEM-FCIDTM, Version 3.16, EPA used
food consumption information from the U.S. Department of Agriculture's
(USDA's) 2003-2008 National Health and Nutrition Examination Survey,
What We Eat in America (NHANES/WWEIA). As to residue levels in food, no
residue data were submitted for d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-
methyl-. In the absence of specific residue data, EPA has developed an
approach which uses surrogate information to derive upper bound
exposure estimates for the subject inert ingredient. Upper bound
exposure estimates are based on the highest tolerance for a given
commodity from a list of high use insecticides, herbicides, and
fungicides. A complete description of the general approach taken to
assess inert ingredient risks in the absence of residue data is
contained in the memorandum entitled ``Alkyl Amines Polyalkoxylates
(Cluster 4): Acute and Chronic Aggregate (Food and Drinking Water)
Dietary Exposure and Risk Assessments for the Inerts,'' (D361707, S.
Piper, 2/25/09) and can be found at http://www.regulations.gov in
docket ID number EPA-HQ-OPP-2008-0738.
    In the dietary exposure assessment, the Agency assumed that the
residue level of the inert ingredient would be no higher than the
highest tolerance for a given commodity. Implicit in this assumption is
that there would be similar rates of degradation (if any) between the
active and inert ingredient and that the concentration of inert
ingredient in the scenarios leading to these highest levels of
tolerances would be no higher than the concentration of the active
ingredient.
    The Agency believes the assumptions used to estimate dietary
exposures lead to an extremely conservative assessment of dietary risk
due to a series of compounded conservatisms. First, assuming that the
level of residue for an inert ingredient is equal to the level of
residue for the active ingredient will overstate exposure. The
concentrations of active ingredient in agricultural products are
generally at least 50 percent of the product and often can be much
higher. Further, pesticide products rarely have a single inert
ingredient; rather there is generally a combination of different inert
ingredients used which additionally reduces the concentration of any
single inert ingredient in the pesticide product in relation to that of
the active ingredient.
    Second, the conservatism of this methodology is compounded by EPA's
decision to assume that, for each commodity, the active ingredient
which will serve as a guide to the potential level of inert ingredient
residues is the active ingredient with the highest tolerance level.
This assumption overstates residue values because it would be highly
unlikely, given the high number of inert ingredients, that a single
inert ingredient or class of ingredients would be present at the level
of the active ingredient in the highest tolerance for every commodity.
Finally, a third compounding conservatism is EPA's assumption that all
foods contain residues of the inert ingredient at the highest tolerance
level. In other words, EPA assumed 100 percent of all foods are treated
with the inert ingredient at the rate and manner necessary to produce
the highest residue legally possible for an active ingredient. In
summary, EPA chose a very conservative method for estimating what level
of inert residue could be on food, then used this methodology to choose
the highest possible residue that could be found on food and assumed
that all food contained this residue. No consideration was given to
potential degradation between harvest and consumption even though
monitoring data shows that tolerance level residues are typically one
to two orders of magnitude higher than actual residues in food when
distributed in commerce.
    Accordingly, although sufficient information to quantify actual
residue levels in food is not available, the compounding of these
conservative assumptions will lead to a significant exaggeration of
actual exposures. EPA does not believe that this approach
underestimates exposure in the absence of residue data.
    To assess dietary exposure due to its use in antimicrobial
products, EPA calculated the daily dietary dose (DDD) and the estimated
daily intake (EDI) as described in the Food Drug Administration (FDA)
model. The assessment considered: Application rates, residual solution
or quantity of solution remaining on the treated surface without
rinsing with potable water, surface area of the treated surface which
comes into contact with food, pesticide migration fraction, and body
weight. These assumptions are based on FDA guidelines (2003). Dietary
exposures due to antimicrobial uses are aggregated with the
aforementioned dietary exposures.
    2. Dietary exposure from drinking water. For the purpose of the
screening-level dietary risk assessment to support this request for an
exemption from the requirement of a tolerance for C1-
C4 linear and branched chain alkyl d-glucitol dianhydro
alkyl ethers, a conservative drinking water concentration value of 100
ppb based on screening-level modeling was used to assess the
contribution to drinking water for the chronic dietary risk assessments
for parent compound. These values were directly entered into the
dietary exposure model.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to non-occupational, non-dietary
exposure (e.g., textiles (clothing and diapers), carpets, swimming
pools, and hard surface disinfection on walls, floors, tables).
    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). D-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl- may be
used as an inert ingredient in pesticide products that are registered
for specific uses that may result in residential exposure. A
conservative residential exposure and risk assessments were completed
for pesticide products containing d-glucitol, 1,4:3,6-dianhydro-2,5-di-
O-methyl- as inert ingredients. The Agency assessed pesticide products
containing d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl- using
exposure scenarios (treated lawns, mopping, wiping and aerosol spray)
to represent conservative residential handler exposure. Further details
of this residential exposure and risk analysis can be found at http://www.regulations.gov in the

memorandum entitled: ``JITF Inert Ingredients. Residential and
Occupational Exposure Assessment Algorithms and Assumptions Appendix
for the Human Health Risk Assessments to Support Proposed Exemption
from the Requirement of a Tolerance When Used as Inert Ingredients in
Pesticide Formulations,'' (D364751, 5/7/09, Lloyd/LaMay in docket ID
number EPA-HQ-OPP-2008-0710. D-glucitol, 1,4:3,6-dianhydro-2,5-di-O-
methyl- is also present in some anti-acne and anti-aging topically
applied pharmaceuticals products. The typical use levels of d-glucitol,
1,4:3,6-dianhydro-2,5-di-O-methyl- in these products are limited to
less than 5.44% to 15% weight/weight (w/w). These products are used
sparingly and applied selectively to limited areas of the skin.
    The Agency does not have sufficient data to quantitatively assess
exposures to d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl- that result
from these non-pesticidal uses. However, the Agency believes the
assessments of exposures due to pesticide uses are protective of these
non-pesticidal uses. Based on the available data on the typical
reported concentration ranges of d-glucitol, 1,4:3,6-dianhydro-2,5-di-
O-methyl- topically applied pharmaceuticals as well as the specific use
and limited exposures resulting from such uses, the Agency anticipates
that exposures to d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl- that
might result from anti-acne and anti-aging topically applied
pharmaceutical products uses are likely to be markedly less than the
conservatively-estimated exposures resulting from pesticide use.
Therefore, the Agency believes that any contribution to the estimated
pesticide exposure resulting from topically applied pharmaceuticals
products is likely to be insignificant in comparison to the estimates
for exposure from pesticide use and these exposures have not been
aggregated with other non-residential exposures.
    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 C1-C4 linear and branched
chain alkyl d-glucitol dianhydro alkyl ethers cluster to share a common
mechanism of toxicity with any other substances, and C1-
C4 linear and branched chain alkyl d-glucitol dianhydro
alkyl ethers cluster does not appear to produce a toxic metabolite
produced by other substances. For the purposes of this tolerance
action, therefore, EPA has assumed that C1-C4
linear and branched chain alkyl d-glucitol dianhydro alkyl ethers
cluster 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 website 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 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.
    The Agency has concluded that there is reliable data to determine
that infants and children will be safe if the FQPA SF of 10x is reduced
to 1x for the chronic dietary assessment for the following reasons. The
toxicity database for C1-C4 linear and branched chain alkyl d-glucitol
dianhydro alkyl ethers cluster contains subchronic, developmental and
mutagenicity studies. There is no indication of immunotoxicity or
neurotoxicity in the available studies; therefore, there is no need to
require an immunotoxicity or neurotoxicity study. Fetal susceptibility
is not observed in developmental toxicity studies in the rat and
rabbit. No maternal or developmental toxicity is observed in either
study up to 300 mg/kg/day. A reproduction toxicity is not available;
however, reproduction parameters were not affected in the submitted
studies at doses as high as 375 and 700 mg/kg/day in the rat and dog,
respectively. Based on the adequacy of the toxicity database, the
conservative nature of the exposure assessment and the lack of concern
for prenatal and postnatal sensitivity, the Agency has concluded that
there is reliable data to determine that infants and children will be
safe if the FQPA SF of 10x is reduced to 1x.

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. No adverse effect resulting from a single oral exposure
was identified and no acute dietary endpoint was selected. Therefore,
C1-C4 linear and branched chain alkyl d-glucitol
dianhydro alkyl ethers cluster 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
C1-C4 linear and branched chain alkyl d-glucitol
dianhydro alkyl ethers cluster from food and water will utilize 70.6%
of the cPAD for children 1 to 2 years old, the population group
receiving the greatest exposure.
    3. Short-term risk. Short-term aggregate exposure takes into
account short-term residential exposure plus chronic exposure to food
and water (considered to be a background exposure level).
    C1-C4 linear and branched chain alkyl d-
glucitol dianhydro alkyl ethers cluster is currently used as an inert
ingredient in pesticide products that are registered for uses that
could result in short-term residential exposure, and the Agency has
determined that it is appropriate to aggregate chronic exposure through
food and water with short-term residential exposures to C1-
C4 linear and branched chain alkyl d-glucitol dianhydro
alkyl ethers cluster.
    Using the exposure assumptions described in this unit for short-
term exposures, EPA has concluded the combined short-term food, water,
and residential exposures result in aggregate MOEs of 148 for adult
males and females. Adult residential exposure combines high-end dermal
and inhalation handler exposure from indoor hard surface, aerosol spray
with a high-end post application dermal exposure from contact with
treated lawns. The combined short-term

aggregated food, water, and residential pesticide exposures result in
an aggregate MOE of 122 for children. Children's residential exposure
includes total exposures associated with contact with treated surfaces
(dermal and hand-to-mouth exposures). Because EPA's level of concern
for C1-C4 linear and branched chain alkyl d-
glucitol dianhydro alkyl ethers cluster is an MOE of less than 100,
these MOEs are not of concern.
    4. Intermediate-term risk. Intermediate-term aggregate exposure
takes into account intermediate-term residential exposure plus chronic
exposure to food and water (considered to be a background exposure
level).
    C1-C4 linear and branched chain alkyl d-
glucitol dianhydro alkyl ethers cluster is currently used as an inert
ingredient in pesticide products that are registered for uses that
could result in intermediate-term residential exposure, and the Agency
has determined that it is appropriate to aggregate chronic exposure
through food and water with intermediate-term residential exposures to
C1-C4 linear and branched chain alkyl d-glucitol
dianhydro alkyl ethers cluster.
    Using the exposure assumptions described in this unit for
intermediate-term exposures, EPA has concluded that the combined
intermediate-term food, water, and residential exposures result in
aggregate MOEs of 434 for adult males and females. Adult residential
exposure includes high end post application dermal exposure from
contact with treated lawns. The combined intermediate-term aggregated
food, water, and residential exposures result in an aggregate MOE of
125 for children. Children's residential exposure includes total
exposures associated with contact with treated surfaces (dermal and
hand-to-mouth exposures). Because EPA's level of concern for
C1-C4 linear and branched chain alkyl d-glucitol
dianhydro alkyl ethers cluster is an MOE of less than 100, these MOEs
are not of concern.
    5. Aggregate cancer risk for U.S. population. Based on a DEREK
structural alert analysis, the lack of mutagenicity, and the lack of
specific organ toxicity in the chronic toxicity study, C1-C4 linear and
branched chain alkyl d-glucitol dianhydro alkyl ethers cluster is not
expected to pose a cancer risk to humans.
    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, or to infants and children from aggregate
exposure to C1-C4 linear and branched chain alkyl
d-glucitol dianhydro alkyl ethers cluster residues.

V. Other Considerations

Analytical Enforcement Methodology

    An analytical method is not required for enforcement purposes since
the Agency is establishing an exemption from the requirement of a
tolerance without any numerical limitation.

VI. Conclusions

    Therefore, exemptions from the requirement of a tolerance are
established for residues of the following seven compounds within the
C1-C4 linear and branched chain alkyl d-glucitol dianhydro alkyl ethers
(AD-GDAE) cluster: (1) d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-methyl-
(CAS Reg. No. 5306-85-4); (2) d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-
ethyl- (CAS Reg. No. 30915-81-2); (3) d-glucitol, 1,4:3,6-dianhydro-
2,5-di-O-propyl) (CAS Reg. No.107644-13-3); (4) d-glucitol, 1,4:3,6-
dianhydro-2,5-bis-O-(1-methylethyl)-,(iso-propyl diether) (CAS Reg. No.
103594-41-8); (5) d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-butyl- (CAS
Reg. No. 103594-42-9); (6) d-glucitol, 1,4:3,6-dianhydro-2,5-di-O-(1-
methylpropyl)-, (CAS Reg. No. not assigned); and (7) d-glucitol,
1,4:3,6-dianhydro-2,5-di-O-(2-methylpropyl)-, (CAS Reg. No. not
assigned) when used as an inert ingredient (solvent, co-solvent,
viscosity modifier and adjuvant) in pesticide formulations applied to
growing crops and raw agricultural commodities after harvest under 40
CFR 180.910; applied in or on animals under 40 CFR 180.930; when used
in antimicrobial formulations applied to food-contact surfaces in
public-eating places, dairy-processing equipment, and food-processing
equipment and utensils under 40 CFR 180.940(a) limited to 500 ppm; and
in antimicrobial formulations used for dairy-processing equipment, and
food-processing equipment and utensils under 40 CFR 180.940(b) limited
to 1,000 ppm.

VII. Statutory and Executive Order Reviews

    This action establishes a tolerance exemption 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 action has been
exempted from review under Executive Order 12866, this action 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), nor is it considered a
regulatory action under Executive Order 13771, entitled ``Reducing
Regulations and Controlling Regulatory Costs'' (82 FR 9339, February 3,
2017). This action does not contain any information collections subject
to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
et seq.), nor does it require any special considerations under
Executive Order 12898, entitled ``Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations'' (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established on the basis
of a petition under FFDCA section 408(d), such as the tolerance in this
final rule, do not require the issuance of a proposed rule, the
requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.), do not apply.
    This action 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 action. In addition, this
action does not impose any enforceable duty or contain any unfunded
mandate as described under Title II of the Unfunded Mandates Reform Act
(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 (NTTAA) (15 U.S.C. 272 note).

VIII. 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: August 8, 2019.
Michael Goodis,
Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

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

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

0
2. In Sec.  180.910, add alphabetically the following inert ingredients
to the table to read as follows:

Sec.  180.910  Inert ingredients used pre- and post-harvest; exemptions
from the requirement of a tolerance.

* * * * *

----------------------------------------------------------------------------------------------------------------
            Inert ingredients                                Limits                              Uses
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
D-glucitol, 1,4:3,6-dianhydro-2,5-di-O-    .........................................  solvent, co-solvent,
 methyl- (CAS Reg. No. 5306-85-4); D-                                                  viscosity modifier, and
 glucitol, 1,4:3,6-dianhydro-2,5-di-O-                                                 adjuvant.
 ethyl- (CAS Reg. No. 30915-81-2); D-
 glucitol, 1,4:3,6-dianhydro-2,5-di-O-
 propyl) (CAS Reg. No.107644-13-3); D-
 glucitol, 1,4:3,6-dianhydro-2,5-bis-O-(1-
 methylethyl)-,(iso-propyl diether) (CAS
 Reg. No. 103594-41-8); D-glucitol,
 1,4:3,6-dianhydro-2,5-di-O-butyl- (CAS
 Reg. No. 103594-42-9); D-glucitol,
 1,4:3,6-dianhydro-2,5-di-O-(1-
 methylpropyl)-, (CAS Reg. No. not
 assigned); and D-glucitol, 1,4:3,6-
 dianhydro-2,5-di-O-(2-methylpropyl)-,
 (CAS Reg. No. not assigned).

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

0
3. In Sec.  180.930, add alphabetically the following inert ingredients
to the table to read as follows:

Sec.  180.930  Inert ingredients applied to animals; exemptions from
the requirement of a tolerance.

* * * * *

----------------------------------------------------------------------------------------------------------------
            Inert ingredients                                Limits                              Uses
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
D-glucitol, 1,4:3,6-dianhydro-2,5-di-O-    .........................................  solvent, co-solvent,
 methyl-(CAS Reg. No. 5306-85-4); D-                                                   viscosity modifier, and
 glucitol, 1,4:3,6-dianhydro-2,5-di-O-                                                 adjuvant.
 ethyl- (CAS Reg. No. 30915-81-2); D-
 glucitol, 1,4:3,6-dianhydro-2,5-di-O-
 propyl) (CAS Reg. No.107644-13-3); D-
 glucitol, 1,4:3,6-dianhydro-2,5-bis-O-(1-
 methylethyl)-,(iso-propyl diether) (CAS
 Reg. No. 103594-41-8); D-glucitol,
 1,4:3,6-dianhydro-2,5-di-O-butyl- (CAS
 Reg. No. 103594-42-9); D-glucitol,
 1,4:3,6-dianhydro-2,5-di-O-(1-
 methylpropyl)-, (CAS Reg. No. not
 assigned); and D-glucitol, 1,4:3,6-
 dianhydro-2,5-di-O-(2-methylpropyl)-,
 (CAS Reg. No. not assigned).

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

0
 4. In Sec.  180.940, add alphabetically the following inert
ingredients to the tables in paragraphs (a) and (b) to read as follows:

Sec.  180. 940  Tolerance exemptions for active and inert ingredients
for use in antimicrobial formulations (Food-contact surface sanitizing
solutions).

* * * * *

    (a) * * *

----------------------------------------------------------------------------------------------------------------
           Pesticide chemical                             CAS Reg. No.                           Limits
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
C1-C4 linear and branched chain alkyl d-  5306-85-4; 30915-81-2; 107644-13-3; 103594-  When ready for use, the
 glucitol dianhydro alkyl ethers cluster.  41-8; 103594-42-9.                           end-use concentration is
                                                                                not to exceed 500 ppm.
D-glucitol, 1,4:3,6-dianhydro-2,5-di-O-   None.......................................  .........................
 (1-methylpropyl)-,.
D-glucitol, 1,4:3,6-dianhydro-2,5-di-O-   None.......................................  .........................
 (2-methylpropyl)-, (CAS Reg. No. not
 assigned).

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

    (b) * * *

----------------------------------------------------------------------------------------------------------------
            Pesticide chemical                            CAS Reg. No.                          Limits
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
C1-C4 linear and branched chain alkyl d-   5306-85-4; 30915-81-2; 107644-13-3;        When ready for use, the
 glucitol dianhydro alkyl ethers cluster.   103594-41-8; 103594-42-9.                  end-use concentration is
                                                                                not to exceed 1,000 ppm.
D-glucitol, 1,4:3,6-dianhydro-2,5-di-O-(1- None.....................................  ..........................
 methylpropyl)-,.
D-glucitol, 1,4:3,6-dianhydro-2,5-di-O-(2- None.....................................  ..........................
 methylpropyl)-, (CAS Reg. No. not
 assigned).

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

* * * * *

[FR Doc. 2019-17993 Filed 8-20-19; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register Volume 88, Number 16 (Wednesday, January 25, 2023)]
[Notices]
[Pages 4830-4832]
[FR Doc No: 2023-01419]

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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2018-N-1988]

Poornanand Palaparty; Denial of Hearing; Final Debarment Order

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA, Agency, or we) is
denying Poornanand Palaparty's (Dr. Palaparty's) request for a hearing
and issuing an order under the Federal Food, Drug, and Cosmetic Act
(FD&C Act) debarring Dr. Palaparty for 3 years from providing services
in any capacity to a person that has an approved or pending drug
product application. FDA bases this order on a finding that Dr.
Palaparty was convicted of a misdemeanor under Federal law for causing
the introduction or delivery for introduction into interstate commerce
of drugs that were misbranded under the FD&C Act. Additionally, FDA
finds that the type of conduct underlying Dr. Palaparty's conviction
undermines the process for the regulation of drugs. In determining the
appropriateness and period of Dr. Palaparty's debarment, FDA considered
the relevant factors listed in the FD&C Act. Dr. Palaparty failed to
file with the Agency information and analyses sufficient to create a
basis for a hearing concerning this action.

DATES: This order is applicable January 25, 2023.

ADDRESSES: Any application for termination of debarment by Dr.
Palaparty under section 306(d) of the FD&C Act (application) may be
submitted as follows:

Electronic Submissions

     Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. An application
submitted electronically, including attachments, to https://www.regulations.gov will be posted to the docket unchanged. Because
your application will be made public, you are solely responsible for
ensuring that your application does not include any confidential
information that you or a third party may not wish to be posted, such
as medical information, your or anyone else's Social Security number,
or confidential business information, such as a manufacturing process.
Please note that if you include your name, contact information, or
other information that identifies you in the body of your application,
that information will be posted on https://www.regulations.gov.
     If you want to submit an application with confidential
information that you do not wish to be made available to the public,
submit the application as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand Delivery/Courier (for written/paper
submissions): Dockets Management Staff (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For a written/paper application submitted to the Dockets
Management Staff, FDA will post your application, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All applications must include the Docket No. FDA-
2018-N-1988. Received applications will be placed in the docket and,
except for those submitted as ``Confidential Submissions,'' publicly
viewable at https://www.regulations.gov or at the Dockets Management
Staff between 9 a.m. and 4 p.m., Monday through Friday,<PHONE_NUMBER>.
     Confidential Submissions--To submit an application with
confidential information that you do not wish to be made publicly
available, submit your application only as a written/paper submission.
You should submit two copies total. One copy will include the
information you claim to be confidential with a heading or cover note
that states ``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The
Agency will review this copy, including the claimed confidential
information, in its consideration of your application. The second copy,
which will have the claimed confidential information redacted/blacked
out, will be available for public viewing and posted on https://www.regulations.gov. Submit both copies to the Dockets Management
Staff. If you do not wish your name and contact information to be made
publicly available, you can provide this information on the cover sheet
and not in the body of your application and you must identify this
information as ``confidential.'' Any information marked as
``confidential'' will not be disclosed except in accordance with 21 CFR
10.20 and other applicable disclosure law. For more information about
FDA's posting of comments to public dockets, see 80 FR 56469, September
18, 2015, or access the information at: https://www.govinfo.gov/content/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket, go to https://www.regulations.gov
and insert the docket number, found in brackets in the heading of this
document, into the ``Search'' box and follow the prompts and/or go to
the Dockets Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville,
MD 20852 between 9 a.m. and 4 p.m., Monday through Friday, 240-402-
7500. Publicly available submissions may be seen in the docket.

FOR FURTHER INFORMATION CONTACT: Rachael Vieder Linowes, Office of
Scientific Integrity, Food and Drug Administration, 10903 New Hampshire
Ave., Bldg. 1, Rm. 4206, Silver Spring, MD 20993,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 306(b)(2)(B)(i)(I) of the FD&C Act (21 U.S.C.
335a(b)(2)(B)(i)(I)) permits FDA to debar an individual if FDA finds
that (1) the individual has been convicted of a misdemeanor under
Federal law for conduct relating to the regulation of drug products
under the

FD&C Act and (2) the type of conduct underlying the conviction
undermines the process for the regulation of drugs under the FD&C Act.
    On September 5, 2013, Dr. Palaparty pled guilty to a misdemeanor
for introducing a misbranded drug into interstate commerce, in
violation of section 301(a) of the FD&C Act (21 U.S.C. 331(a)).
According to the criminal information to which Dr. Palaparty pled
guilty, between July 4, 2004, and February 26, 2009, Dr. Palaparty, an
oncologist, purchased and received prescription oncology drugs from a
distributer located in Canada. Dr. Palaparty's actions caused the
introduction into interstate commerce of drugs that were misbranded
under section 502(f)(1) of the FD&C Act (21 U.S.C. 352(f)(1)) because
their labeling did not bear adequate directions for use. On November
12, 2014, the U.S. District Court for the Northern District of Ohio
entered a judgment of conviction against Dr. Palaparty for his
violation of section 301(a) and sentenced him to 1 year of probation.
    By letter dated July 13, 2018, FDA's Office of Regulatory Affairs
(ORA) proposed to debar him for 3 years from providing services in any
capacity to a person that has an approved or pending drug product
application and provided him with an opportunity to request a hearing.
The proposal explained that FDA based the proposed debarment on his
misdemeanor conviction. The proposal outlined findings concerning the
four relevant factors that ORA considered in determining the
appropriateness and period of debarment, as provided in section
306(c)(3) of the FD&C Act: (1) the nature and seriousness of the
offense, (2) the nature and extent of management participation in the
offense, (3) the nature and extent of voluntary steps to mitigate the
impact on the public, and (4) prior convictions under the FD&C Act or
other Acts involving matters within FDA's jurisdiction. ORA found that
the first two factors were unfavorable factors, and the last two
factors were favorable for Dr. Palaparty. The notice concluded that the
unfavorable factors outweighed the favorable factors and that a 3-year
debarment was appropriate.
    By letters dated August 10, 2018, and September 10, 2018, Dr.
Palaparty, through counsel, requested a hearing on the proposal. Dr.
Palaparty argues that FDA failed to consider certain facts underlying
his conviction and therefore inappropriately weighed the factors under
section 306(c)(3) of the FD&C Act. Dr. Palaparty primarily disputes
ORA's assessment of the nature and seriousness of his offense.
Separately, Dr. Palaparty requests that FDA consider a settlement
between the Agency and himself as an alternative to debarment.
    Under the authority delegated to her by the Commissioner of Food
and Drugs, the Chief Scientist has considered Dr. Palaparty's request
for a hearing. Hearings are granted only if there is a genuine and
substantial issue of fact. Hearings will not be granted on issues of
policy or law, on mere allegations, denials, or general descriptions of
positions and contentions, or on data and information insufficient to
justify the factual determination urged (see Sec.  12.24(b) (21 CFR
12.24(b))).
    Based on this review, the Chief Scientist concludes that Dr.
Palaparty has failed to raise a genuine and substantial issue of fact
requiring a hearing and that he has thus not justified a hearing. Given
the undisputed factual findings in the proposal to debar, the Chief
Scientist finds that a 3-year debarment period is appropriate.

II. Arguments

    In the proposal to debar, ORA relied on the criminal information
and the Government's sentencing memorandum in addressing the nature and
seriousness of the offense. ORA noted that Dr. Palaparty ``continued
purchasing misbranded drugs despite being notified by FDA on multiple
occasions between 2004 and 2009 that foreign drug shipments destined
for [his] office had been detained and appeared to be unlawfully
marketed unapproved new drugs.'' ORA found that his ``conduct created a
risk of injury to consumers by exposing patients to unapproved new
drugs'' and that his conduct undermined the Agency's drug approval
process and oversight of the manufacture, importation, and sale of drug
products in interstate commerce in the United States.
    In his request for a hearing, Dr. Palaparty disagrees with ORA's
assertion that his conduct created a risk of injury to consumers by
exposing patients to unapproved new drugs. Dr. Palaparty claims that
Agency investigators ``told him that he could use the rest of the
unapproved drugs as long as he did not order more of them.'' Dr.
Palaparty suggests that ``[i]f these drugs truly posed a great risk to
the public, the investigators would have instructed him to destroy the
remaining drugs and would not have allowed him to use his remaining
supply.''
    Even if we assume what Dr. Palaparty asserts is true--that, on a
given day in 2009, FDA agents told Dr. Palaparty he could use up the
limited stock of unapproved new drugs he had in his office, instead of
destroying the drugs--this alone would not establish that his overall
pattern of conduct posed no risk to his patients and thus the public.
Instead, his overall pattern of conduct over a 5-year period
establishes that Dr. Palaparty willingly created a risk of injury to
his patients. Dr. Palaparty does not dispute that, between 2004 and
2009, he placed multiple orders for unapproved oncology drugs,
including Kytril, Gemzar, Oxaliplatin, Irinotecan, Camptosar, Zometa,
Gemcitabine, Campto, Zoledronic Acid, and Carboplatin, manufactured
outside of the United States. Additionally, Dr. Palaparty does not
dispute that he continued purchasing these misbranded drugs despite
being notified by FDA, on multiple occasions between 2004 and 2007,
that these foreign drug shipments destined for his office had been
detained and appeared to be unlawfully marketed unapproved new drugs.
These undisputed facts, combined with the record underlying Dr.
Palaparty's guilty plea, provide an ample basis for ORA to conclude
that Dr. Palaparty should be debarred and that the ``nature and
seriousness of [his] . . . offense'' is a factor that should be weighed
against him in determining the length of his debarment.
    Under Sec.  12.24(b)(3), FDA will deny a hearing if ``the data and
information submitted are insufficient to justify the factual
determination urged, even if accurate.'' Applying this standard, Dr.
Palaparty has offered allegations that, even if true, are insufficient
to justify the larger factual determination he seeks: namely, that the
larger pattern of his conduct posed no risk to his patients and the
public and thus, by extension, did not interfere with FDA's ability to
oversee the manufacture, importation, and sale of drug products in
interstate commerce. Therefore, Dr. Palaparty fails to create an issue
for hearing with respect to whether the nature and seriousness of the
offense is an unfavorable factor in determining the appropriateness and
length of debarment.
    Dr. Palaparty does not object to the rest of ORA's findings in the
proposal to debar. Regarding the nature and extent of management
participation in the offense, Dr. Palaparty concedes that he held a
position of authority in his medical practice as a licensed physician.
Dr. Palaparty's admission to his position of authority warrants
treating the management participation factor as an unfavorable factor
in determining the appropriateness and

length of debarment. With respect to the third and fourth factors, he
supports the findings that he mitigated the impact of his offenses on
the public by fully cooperating with investigators and that he had no
convictions involving matters within the jurisdiction of FDA.
    Considering all the applicable factors listed in section 306(c)(3)
of the FD&C Act, the Chief Scientist finds that Dr. Palaparty's
conviction and underlying conduct warrant the 3-year debarment proposed
by ORA. It is undisputed that Dr. Palaparty pled guilty to a serious
misdemeanor offense by causing the introduction into interstate
commerce of drugs that were misbranded by virtue of their unapproved
status. It is undisputed that Dr. Palaparty had a managerial role,
further cementing the serious nature of Dr. Palaparty's conduct. While
Dr. Palaparty ultimately took voluntary steps to mitigate the effect on
the public health from the unlawful conduct and does not have any
previous criminal convictions related to matters within FDA's
jurisdiction, those considerations do not outweigh the nature and
seriousness of the conduct to a degree that would warrant a debarment
period of less than 3 years. Therefore, a 3-year debarment is
appropriate.
    Separately, Dr. Palaparty requests that, in lieu of debarment by
FDA, he enter into a settlement agreement with FDA whereby he would
voluntarily agree to the terms of the proposed debarment for the
proposed period of debarment and to not provide services in any
capacity to a person that has an approved or pending drug product
application. Dr. Palaparty appears to be proposing an informal
resolution of this debarment matter. However, his request is now moot,
given the foregoing findings, which establish that Dr. Palaparty has
failed to justify a hearing with respect to ORA's proposal to debar him
for 3 years, and support his debarment for the proposed time.

III. Findings and Order

    Therefore, the Chief Scientist, under section 306(b)(2)(B)(i)(I) of
the FD&C Act and authority delegated to her by the Commissioner of Food
and Drugs, finds that Dr. Palaparty has been convicted of a misdemeanor
under Federal law for causing the introduction into interstate commerce
of prescription drugs that were misbranded under the FD&C Act and that
the conduct underlying the conviction undermines the process for the
regulation of drugs. FDA considered the relevant factors listed in
section 306(c)(3) of the FD&C Act and determined that a 3-year
debarment is appropriate.
    As a result of the foregoing findings, Dr. Palaparty is debarred
for 3 years from providing services in any capacity to a person with an
approved or pending drug product application under sections 505, 512,
or 802 of the FD&C Act (21 U.S.C. 355, 360b, or 382), or under section
351 of the Public Health Service Act (42 U.S.C. 262), effective January
25, 2023, (see 21 U.S.C. 335a(c)(1)(B) and (c)(2)(A)(iii) and 21 U.S.C.
321(dd)). Any person with an approved or pending drug application who
knowingly uses the services of Dr. Palaparty, in any capacity during
his debarment, will be subject to civil money penalties (section
307(a)(6) of the FD&C Act (21 U.S.C. 335b(a)(6))). If Dr. Palaparty,
during his period of debarment, provides services in any capacity to a
person with an approved or pending drug product application, he will be
subject to civil money penalties (section 307(a)(7) of the FD&C Act).
In addition, FDA will not accept or review any abbreviated new drug
applications submitted by or with the assistance of Dr. Palaparty
during his period of debarment (section 306(c)(1)(B) of the FD&C Act).

    Dated: January 19, 2023.
Namandje N. Bumpus,
Chief Scientist.
[FR Doc. 2023-01419 Filed 1-24-23; 8:45 am]
BILLING CODE 4164-01-P