The Board is proposing amendments to Regulation Y (12 CFR part 225) to require large bank holding companies to submit capital plans to the Federal Reserve on an annual basis and to require such bank holding companies to provide prior notice to the Federal Reserve under certain circumstances before making a capital distribution (the proposal or proposed rule). 1 During the years leading up to the recent financial crisis, many bank holding companies made significant distributions of capital, in the form of stock repurchases and dividends, without due consideration of the effects that a prolonged economic downturn could have on their capital adequacy and ability to continue to operate and remain credit intermediaries during times of economic and financial stress. The proposal is intended to address such practices, building upon the Federal Reserve's existing supervisory expectation that large bank holding companies have robust systems and processes that incorporate forward-looking projections of revenue and losses to monitor and maintain their internal capital adequacy. 2

The Federal Reserve has long held the view that bank holding companies generally should operate with capital positions well above the minimum regulatory capital ratios, with the amount of capital held commensurate with the bank holding company's risk profile. 3 Bank holding companies should have internal processes for assessing their capital adequacy that reflect a full understanding of their risks and ensure that they hold capital corresponding to those risks to maintain overall capital adequacy. 4 Bank holding companies that are subject to the Board's advanced approaches risk-based capital requirements must satisfy specific requirements relating to their internal capital adequacy processes in order to use the advanced approaches to calculate their minimum risk-based capital requirements. 5 Under section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), the Board is required to impose enhanced prudential standards on large bank holding companies, including stress testing requirements; enhanced capital, liquidity, and risk management requirements; and a requirement to establish a risk committee. 6 While the proposal is not mandated by the Dodd-Frank Act, the Board believes that it is appropriate to hold large bank holding companies to an elevated capital planning standard because of the elevated risk posed to the financial system by large bank holding companies and the importance of capital in mitigating these risks.

As part of their fiduciary responsibilities to a bank holding company, the board of directors and senior management bear the primary responsibility for developing, implementing, and monitoring a bank holding company's capital planning strategies and internal capital adequacy processes. The proposal does not diminish that responsibility. Rather, the proposal is intended to (i) Establish minimum supervisory standards for such strategies and processes for certain large bank holding companies; (ii) describe how boards of directors and senior management of these bank holding companies should communicate the strategies and processes, including any material changes thereto, to the Federal Reserve; and (iii) provide the Federal Reserve with an opportunity to review bank holding companies' capital distributions under certain circumstances. The proposal is designed to be flexible enough to accommodate bank holding companies of varying degrees of complexity and to adjust to changing conditions over time.

The proposal is also consistent with the Federal Reserve's recent supervisory practice of requiring capital plans from large, complex bank holding companies. In 2009, the Board conducted the Supervisory Capital Assessment Program (SCAP), a “stress test” of 19 large, domestic bank holding companies. The SCAP was focused on identifying whether large bank holding companies had capital sufficient to weather a more-adverse-than-anticipated economic environment while maintaining their capacity to lend. The Federal Reserve required firms identified as having capital shortfalls to raise specific dollar amounts of capital within six months of the release of the SCAP results. The Department of the Treasury established a government backstop available to firms unable to raise the required capital from private markets. 7

In 2011, the Federal Reserve continued its supervisory evaluation of the resiliency and capital adequacy processes of the same 19 bank holding companies through the Comprehensive Capital Analysis and Review (CCAR). CCAR involved the Federal Reserve's forward-looking evaluation of the internal capital planning processes of the bank holding companies and their anticipated capital actions in 2011, such as increasing dividend payments or repurchasing or redeeming stock. 8 In CCAR, the Federal Reserve evaluated whether these bank holding companies had satisfactory processes for identifying capital needs and held adequate capital to maintain ready access to funding, continue operations and meet their obligations to creditors and counterparties, and continue to serve as credit intermediaries, even under stressful conditions.

As noted above, the Dodd-Frank Act imposes enhanced prudential standards, including stress testing requirements, on large bank holding companies. 9 As the Board implements the Dodd-Frank Act, bank holding companies would be required to incorporate any related requirements into their capital planning strategies and internal capital adequacy processes, including the results of stress tests required by the Dodd-Frank Act.

The Dodd-Frank Act also requires the Board to impose early remediation requirements on large bank holding companies under which a large bank holding company experiencing financial distress must take specific remedial actions in order to minimize the probability that the company will become insolvent and minimize the potential harm of such insolvency to the United States. 10 These early remediation requirements must impose limitations on capital distributions in the initial stages of financial decline and increase in stringency as the financial condition of the company declines. 11 Depending on a bank holding company's financial condition, early remediation requirements imposed under the Dodd-Frank Act may result in additional limitations on a company's capital distributions than the prior notice requirements that would be imposed by the proposed rule. 12

The proposed rule would apply to every top-tier bank holding company domiciled in the United States that has $50 billion or more in total consolidated assets (large U.S. bank holding companies). 13 This amount would be measured as the average over the previous two calendar quarters, as reflected on the bank holding company's consolidated financial statement for bank holding companies (FR Y-9C). Consistent with the phase-in period for the imposition of minimum risk-based and leverage capital requirements established in section 171 of the Dodd-Frank Act, until July 21, 2015, the proposed rule would not apply to any bank holding company subsidiary of a foreign banking organization that has relied on Supervision and Regulation Letter SR 01-01 issued by the Board of Governors (as in effect on May 19, 2010). 14 The proposed rule also would apply to any institution that the Board has determined, by order, shall be subject in whole or in part to the proposed rule's requirements based on the institution's size, level of complexity, risk profile, scope of operations, or financial condition.

As of March 31, 2011, there were approximately 35 large U.S. bank holding companies. The Board notes that the proposed asset threshold of $50 billion is consistent with the threshold established by section 165 of the Dodd- Frank Act relating to enhanced supervision and prudential standards for certain bank holding companies. 15 The proposal generally would apply to large U.S. bank holding companies when any final rule becomes effective.

The Board solicits comment on whether the capital planning and prior notice requirements in the proposed rule should apply, as proposed, to large U.S. bank holding companies. What other asset threshold(s) would be appropriate and why? Are there other measures other than total consolidated assets that should be considered?

In addition, the Board solicits comment on whether the proposed rule should include a transitional period for institutions that did not participate in CCAR. For example, should such institutions have an additional year to come into compliance with the proposed capital planning and prior notice requirements?

The proposed rule would require a bank holding company to develop and maintain a capital plan. For purposes of the proposal, a capital plan is defined as a written presentation of a company's capital planning strategies and capital adequacy processes that includes (i) An assessment of the expected uses and sources of capital over a nine-quarter forward-looking planning period (beginning with the quarter preceding the quarter in which the bank holding company submits its capital plan) that reflects the bank holding company's size, complexity, risk profile, and scope of operations, assuming both expected and stressful conditions, (ii) a detailed description of the bank holding company's processes for assessing capital adequacy, and (iii) an analysis of the effectiveness of these processes. As described below, the proposed rule specifies certain mandatory elements of a capital plan. The level of detail and analysis expected in a capital plan would vary based on the bank holding company's size, complexity, risk profile, and scope of operations. Thus, for example, a bank holding company with extensive credit exposures to commercial real estate, but very limited trading activities, would be expected to have robust systems in place to identify and monitor its commercial real estate exposures; its systems related to trading activities would not need to be as sophisticated or extensive. In contrast, a bank holding company with extensive exposure to a variety of risk exposures, including both retail and wholesale exposures, as well as significant trading activities and international operations, would be expected to have an integrated system for measuring all these risk exposures and the interactions among them.

The bank holding company's board of directors or a designated committee thereof would be required at least annually to review the effectiveness of the holding company's processes for assessing capital adequacy, ensure that any deficiencies in the firm's processes for assessing capital adequacy are appropriately remediated, and approve the bank holding company's capital plan. 16 After the capital plan is approved by the board of directors, the bank holding company would be required to submit its complete capital plan to the appropriate Reserve Bank and the Board by the 5th of January of each year, or such later date as directed by the appropriate Reserve Bank, after consultation with the Board. A later date may be appropriate if, for example, the bank holding company would need additional time to update its plan to reflect any scenarios that the Federal Reserve has required the bank holding company to evaluate and incorporate in its capital plan as part of its submission.

A bank holding company would be required to update and resubmit its capital plan to the appropriate Reserve Bank and the Board within 30 calendar days after the occurrence of one of the following events:

(i) The bank holding company determines there has been or will be a material change in the bank holding company's risk profile (including a material change in its business strategy or any material risk exposures), financial conditions, or corporate structure since the bank holding company adopted the capital plan;  17 or

(ii) The appropriate Reserve Bank, after consultation with the Board, directs the bank holding company to update its capital plan for reasons described in the proposal.

The appropriate Reserve Bank, after consultation with the Board, could at its sole discretion extend this 30-day period for up to an additional 60 calendar days. Any updated capital plan would be required to satisfy all the requirements of the proposal as if it were the original submission, unless otherwise specified by the appropriate Reserve Bank, after consultation with the Board. However, to the extent that the analysis underlying an initial capital plan were still considered valid, the bank holding company would be able to continue to rely on this analysis for purposes of any revised or updated plan, provided that the analysis was accompanied by an explanation of how the analysis should be considered in the light of any new capital actions or changes in risk profile or strategy.

Every capital plan would be required to contain at least the following elements:

(i) A discussion of how the bank holding company will, under stressful conditions, maintain capital commensurate with its risks, maintain capital above the minimum regulatory capital ratios, and serve as a source of strength to its depository institution subsidiaries;

(ii) A discussion of how the bank holding company will, under stressful conditions, continue its operations by maintaining ready access to funding, meeting its obligations to creditors and other counterparties, and continuing to serve as a credit intermediary;

(iii) A discussion of the bank holding company's sources and uses of capital over a minimum nine-quarter planning horizon reflecting the risk profile of the firm, including:

(A) Estimates of projected revenues, losses, reserves, and pro forma capital levels, including any minimum regulatory capital ratios (for example, leverage, tier 1 risk-based, and total risk-based) and any additional capital measures deemed relevant by the bank holding company, over the planning horizon under expected conditions and under a range of stressed scenarios, including any scenarios provided by the Federal Reserve and at least one stressed scenario developed by the bank holding company appropriate to its business model and portfolios, and a probabilistic assessment of the likelihood of the bank holding company-developed scenario(s);  18

Comments Invited

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2011-0536 and Airspace Docket No. 11-ANM-13) and be submitted in triplicate to the Docket Management System (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov .

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2011-0536 and Airspace Docket No. 11-ANM-13”. The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov/airports_airtraffic/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address and phone number) between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the Northwest Mountain Regional Office of the Federal Aviation Administration, Air Traffic Organization, Western Service Center, Operations Support Group, 1601 Lind Avenue, SW., Renton, WA 98057.

Persons interested in being placed on a mailing list for future NPRMs should contact the FAA's Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by creating additional Class E airspace extending upward from 700 feet above the surface at Shelby Airport, Shelby MT. Controlled airspace is necessary to accommodate aircraft using the RNAV (GPS) standard instrument approach procedures at the airport, and would enhance the safety and management of aircraft operations. Adjustments to the geographic coordinates of the airport also would be made.

Class E airspace designations are published in paragraph 6005, of FAA Order 7400.9U, dated August 18, 2010, and effective September 15, 2010, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in this Order.

The FAA has determined this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation; (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified this proposed rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the U.S. Code. Subtitle 1, section 106, describes the authority for the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in subtitle VII, part A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would create additional controlled airspace at Shelby Airport, Shelby, MT.

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2011-0232 and Airspace Docket No. 11-AWA-3) and be submitted in triplicate to the Docket Management Facility (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov.

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Nos. FAA-2011-0232 and Airspace Docket No. 11-AWA-3.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/regulations_policies/rulemaking/recently_published/.

You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see ADDRESSES section for address and phone number) between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the office of the Western Service Center, Federal Aviation Administration, 1601 Lind Ave., SW., Renton, WA 98057.

Persons interested in being placed on a mailing list for future NPRMs should contact the FAA's Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

In 1974, the FAA issued a final rule establishing the Seattle-Tacoma, WA, Terminal Control Area (38 FR 17250). As a result of the Airspace Reclassification final rule (56 FR 65638), which became effective in 1993, the terms “terminal control area” and “airport radar service area” were replaced by “Class B airspace area” and “Class C airspace area,” respectively. The primary purpose of a Class B airspace area is to reduce the potential for midair collisions in the airspace surrounding airports with high density air traffic operations by providing an area, in which all aircraft are subject to certain operating rules and equipment requirements.

In recent years, Seattle has completed construction projects that modernized the airport and added capacity at SEA. These projects included the construction of a new Runway 16 L/R and 34 L/R, which increased the lateral distance between runways and allows simultaneous arrival and departure operations under visual flight rules (VFR) and simultaneous approaches during IFR conditions. Operationally, using parallel dependent ILS approaches results in higher airport arrival acceptance rates during IFR minimums, but requires aircraft to be established on the final approach courses not less than 17 miles from the airport. During periods of moderate air traffic, this requirement quickly extends the final approach course to a distance greater than 22 miles from the airport, which places the aircraft on the approaches outside the confines of the current Seattle Class B airspace.

Since the Seattle Class B airspace area was established in 1974, SEA has experienced increased traffic levels, a considerably different fleet mix, and airport infrastructure improvements enabling simultaneous instrument approach procedures. For calendar year 2009, SEA documented 316,136 total operations and was rated number 16 among all Commercial Service Airports with 15,273,092 passenger enplanements. Under the current Class B airspace configuration, aircraft routinely enter, exit, and then reenter Class B airspace while flying published instrument approach procedures, which is contrary to FAA Order 7400.2, Procedures for Handling Airspace Matters. In addition, SEA now utilizes parallel dependent ILS approaches, which requires aircraft to be established on final at least 17 miles from the airport. This results in aircraft exceeding the lateral boundaries of the current Class B airspace by up to 5 to 10 miles during moderate levels of air traffic. FAA modeling of existing traffic flows has shown that expanded Class B airspace extensions would enhance safety by containing all instrument approach procedures and associated traffic patterns within the confines of Class B airspace, and better segregate IFR aircraft arriving/departing SEA and VFR aircraft operating in the vicinity of Seattle Class B airspace. The proposed Class B airspace modifications described in this NPRM are intended to address these issues.

In 2010, the FAA initiated action to form an Ad Hoc Committee to provide comments and recommendations regarding the planned modifications to the Seattle Class B airspace area. The Washington State Department of Transportation chaired the Ad Hoc Committee; participants included representatives of air carrier, Aircraft Owners and Pilot Association, general aviation, corporate, helicopter, government agencies with aviation interests, military and law enforcement airspace users. The Ad Hoc Committee responded in July 2010 and provided a proposed modification of the Seattle Class B airspace area to the FAA Seattle Terminal Radar Approach Control Facility (TRACON).

In addition, and as announced in the Federal Register (75 FR 60352), three informal airspace meetings were held on December 9, 2010, at the Snohomish County Auditorium, Everett, WA; December 14, 2010, at the Highline Performing Arts Center, Burien, WA; and December 16, 2010, at the Theater at Auburn Mountainview, Auburn, WA.

These meetings provided interested airspace users with an opportunity to present their views and offer suggestions regarding the planned modification of the Seattle Class B airspace. All comments received as a result of the informal airspace meetings, along with the recommendations made by the Ad Hoc Committee, were considered in developing this proposal.

The Ad Hoc Committee recommended a design with two ceilings: 7,000 feet MSL in the outer areas and 10,000 feet MSL for the inner areas. The FAA analyzed the recommendation and found that due to local terrain the recommendation had merit. Maintaining a classic Class B design similar to the current one would make the design more complex and use more airspace than necessary to protect SEA arrivals and departures.

In reaching this recommendation, the Ad Hoc Committee considered non-participating aircraft possibly crossing the ends of the airspace at 7,500 feet, but the presence of nonparticipating aircraft in close proximity to Class B airspace is not unique to SEA. Also, the committee discussed whether a non-traditional design might be confusing or difficult to navigate around, and concluded that it was not.

After the Ad Hoc Committee's report was submitted to the TRACON, Seattle TRACON recommended adding to the original proposal by expanding Area F from 2,000 feet to 10,000 feet to the northwest to cover Puget Sound west of Elliott Bay and the residential area over Magnolia Bluff. This would encompass the Boeing Field/King County International Airport (BFI) Instrument Landing System runway 13R final approach course in the Class B airspace. Numerous Traffic Alert and Collision Avoidance System (TCAS) events with large and heavy jet aircraft have been reported in this area.

Since BFI traffic is in close proximity to SEA traffic in a south flow, such TCAS events have immediate repercussions on SEA traffic, particularly if the aircraft responding to a TCAS Resolution Advisory climbs into the path of traffic on the SEA final. This situation impacts SEA traffic, and expanding the Class B airspace in this area may be a potential solution.

In the current Class B airspace configuration, the area over the water west of the northwest corner of Area D and Magnolia Bluff itself is beneath a 3,000 foot to 10,000 foot shelf. This proposal would lower the floor of Class B to 2,000 feet on either side of the BFI runway 13R final approach course. Area D over BFI would remain exactly the same as in the current airspace configuration.

Ninety-six comments were received during the public meetings requesting the elimination of the 2,000 foot proposal over Magnolia due to increased noise and air pollution. These comments also disagreed with the need to change airspace, argued the inconvenience of public meeting location, and contended that the airspace changes would increase aircraft noise disturbance to nesting birds. A petition from the Magnolia community was submitted with 862 signatures attached.

Based on the public comments received, the FAA concedes that effective alternatives exist for achieving the increased safety that was the objective of lowering the airspace floor. Therefore, the FAA intends to examine alternative, nonregulatory (procedural) means to reducing the TCAS events. The FAA will stress efforts toward increased enforcement and pilot education, and improved procedures, and, only if appropriate, pursue a regulatory solution in the Seattle Magnolia area.

Several comments were received indicating a preference to retain the classic VOR radial/DME description methods for the Seattle Class B airspace area.

Initially, the FAA considered a classic description method but it would result in a design that used more airspace than necessary to contain SEA traffic. The primary description methodology is using geographic coordinates (latitude and longitude). Wherever possible, however, the airspace corners, intersections and more central, lower altitude pieces are described in multiple ways, including the VOR radial/DME method.

Three commenters requested a reduction in the Class B airspace around the Enumclaw glider area/Bergseth Airport (private).

The FAA agrees that the proposed airspace would cause a hardship for glider flights returning to the Bergseth Airport. The final proposed airspace has been adjusted to mitigate the impact.

Two commenters stated the proposed airspace design will “squeeze” or “trap” VFR aircraft on the edges of the Class B.

The FAA agrees with these comments, and the two areas specified—on the northeast and southeast corners of the proposed airspace—have been reshaped to mitigate this concern.

Two commenters believed the VFR corridors must be retained and usable.

The proposed design will require a slight modification to the VFR flyways.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 to modify the SEA Class B airspace area. This action (depicted on the attached chart) proposes to revise the Class B airspace while maintaining some existing features familiar to local users. Overall, it reduces the size of the Seattle Class B airspace by approximately 194 square miles. Containing two different ceiling altitudes, the Class B proposal expands the eastern boundary to ensure containment of turbojet aircraft, but eliminates excessive outer (arrival route) wings that currently extend to 30 nautical miles (NM). Where possible, this proposal also aligns certain Class B boundaries with existing Very High Frequency Omnidirectional Range Navigational Aids and geographical features resulting in improved boundary definition. This would make navigation around and through the airspace easier for a variety of aviation interests, even though it consists of primary boundary portrayal using latitude and longitude points (GPS waypoints). The following are the proposed revisions for each area of the SEA Class B airspace:

Area A. 2 NM arc northeast of SEA would be straightened and realigned with the border of Class D airspace. The area just south of SEA would be moved slightly to the west to better contain arrivals to SEA runway 34L/departures from 16R. This runway 34L/16R was recently constructed and commissioned in 2008. Its extended centerline to the south is just barely contained within the current Class B airspace. There is no other traffic in this area except SEA traffic.

Area B. No change.

Area C. Southeast corner would be moved to the west, and floor of airspace would be raised from 1,600 feet to 1,800 feet.

Area D. No change.

Area E. Southeast border of airspace would be moved slightly to the west.

Area F. No change.

Area G. 2 NM arc northeast of SEA would be straightened and realigned with the border of Class D airspace.

Area H. Entire airspace would be moved east slightly. Northern and southern boundaries are depicted as angles instead of curves.

Area I. Floor would be lowered to 4,000 feet. Area would be narrowed and described with straight lines instead of curved lines.

Area J. New area would join existing areas that had floors of 5,000 feet.

Area K. New area with floor of 5,000 feet.

Area L. Area would be narrowed and described with straight lines instead of curved lines.

Area M. Area would be expanded slightly on the northeast and southeast corners and described with straight lines instead of curved lines.

Area N. New area floor would be raised from 3,000 feet to 4,000 feet in part of area, and lowered from 5,000 feet to 4,000 feet in part of area. Boundary would be described by straight lines.

Area O. Area would be considerably smaller. Floor would be lowered from 6,000 feet to 5,000 feet in part of the area, and raised from 3,000 feet to 5,000 feet in part of area. Ceiling would be lowered from 10,000 feet to 7,000 feet.

Area P. Area would be considerably smaller. Floor would be lowered from 6,000 feet to 5,000 feet in part of the area and raised from 3,000 feet to 5,000 feet in part of area. Ceiling would be lowered from 10,000 feet to 7,000 feet.

Area Q. Area would be reshaped with straight lines instead of curved lines. Floor would be lowered from 6,000 feet and 8,000 feet to 5,000 feet. Ceiling would be lowered from 10,000 feet to 7,000 feet.

Area R. Size of area would be significantly reduced and described by straight lines instead of curved lines.

Area S. Area would be reshaped with straight lines instead of curved lines.

Area T. Area would be reshaped with straight lines instead of curved lines. Ceiling would be lowered from 10,000 feet to 7,000 feet. These changes are being proposed to ensure the containment of IFR aircraft within Class B airspace as required by FAA directives.

All radials listed in the SEA Class B airspace description in this NPRM are stated in degrees relative to both True North and Magnetic North.

Class B airspace areas are published in paragraph 3000 of FAA Order 7400.9U, dated August 18, 2010, and effective September 15, 2010, and incorporated by reference in 14 CFR 71.1. The Class B airspace area proposed in this document would be published subsequently in the Order.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. We have determined that there is no new information collection requirement associated with this proposed rule.

Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 directs that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or Tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this proposed rule.

Department of Transportation Order DOT 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect and the basis for it be included in the preamble if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this proposed rule. The reasoning for this determination follows.

After consultation with a diverse cross-section of stakeholders that participated in the Ad Hoc Committee to develop the recommendations contained in this proposal, and a review of the recommendations and comments, the FAA expects that this proposed rule would result in minimal cost. This proposed rule would enhance safety by containing all instrument approach procedures, and associated traffic patterns, within the confines of Class B airspace and better segregate IFR aircraft arriving/departing SEA and VFR aircraft operating in the vicinity of the Seattle Class B airspace.

This NPRM would enhance safety, reduce the potential for a midair collision in the Seattle area and would improve the flow of air traffic. As such, we estimate a minimal impact with substantial positive net benefits. The FAA requests comments with supporting justification about the FAA determination of minimal impact. The FAA has, therefore, determined that this proposed rule is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, and is not “significant” as defined in DOT's Regulatory Policies and Procedures.

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions.

Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.

However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

The FAA believes the proposal would not have a significant economic impact on a substantial number of small entities as the economic impact is expected to be minimal. We request comments from the potentially affected small businesses.

Therefore, the FAA certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities.

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this proposed rule and determined that it would enhance safety and is not considered an unnecessary obstacle to trade.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (in 1995 dollars) in any one year by State, local, and Tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $143.1 million in lieu of $100 million. This proposed rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not apply.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Comments Invited

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA 2011-0496 and Airspace Docket No. 11-AWP-6) and be submitted in triplicate to the Docket Management System (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov .

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2011-0496 and Airspace Docket No. 11-AWP-6”. The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov . Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/airports_airtraffic/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address and phone number) between 9 a.m. and 5 p.m., Monday through Friday, except federal holidays. An informal docket may also be examined during normal business hours at the Northwest Mountain Regional Office of the Federal Aviation Administration, Air Traffic Organization, Western Service Center, Operations Support Group, 1601 Lind Avenue, SW., Renton, WA 98057.

Persons interested in being placed on a mailing list for future NPRMs should contact the FAA's Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by establishing Class D airspace at Los Angeles International Airport, Los Angeles, CA for containment of potential missed approaches at Los Angeles International Airport. This action is based on the results of a study conducted by the Los Angeles VFR Task Force, and the Los Angeles Class B Workgroup. This action would further enhance the safety and management of aircraft operations at the airport. This action also would edit Class E airspace extending upward from 700 feet above the surface by adding “Los Angeles International Airport, CA” and “lat. 33°56′33″ N., long. 118°24′26″ W.” to the airspace designation.

Class D and Class E airspace designations are published in paragraph 5000 and 6005, respectively, of FAA Order 7400.9U, dated August 18, 2010, and effective September 15, 2010, which is incorporated by reference in 14 CFR 71.1. The Class D and Class E airspace designation listed in this document will be published subsequently in this Order.

The FAA has determined this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified this proposed rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the U.S. Code. Subtitle 1, section 106, describes the authority for the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in subtitle VII, part A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes additional controlled airspace at Los Angeles International Airport, Los Angeles, CA.

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Comments Invited

Interested persons are invited to comment on this rule by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2011-0402; Airspace Docket No. 11-ASO-18) and be submitted in triplicate to the Docket Management System (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov .

Annotators wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2011-0402; Airspace Docket No. 11-ASO-18.” The postcard will be date/time stamped and returned to the commenter.

All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded from and comments submitted through http://www.regulations.gov . Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov/airports_airtraffic/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see the ADDRESSES section for address and phone number) between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays. An informal docket may also be examined during normal business hours at the office of the Eastern Service Center, Federal Aviation Administration, Room 210, 1701 Columbia Avenue, College Park, Georgia 30337.

Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory circular No. 11-2A, Notice of Proposed Rulemaking distribution System, which describes the application procedure.

The FAA is considering an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 to establish Class E airspace at Copperhill, TN, providing the controlled airspace required to support the new RNAV GPS standard instrument approach procedures for Martin Campbell Field Airport. Controlled airspace extending upward from 700 feet above the surface would be established for the safety and management of IFR operations at the airport.

Class E airspace designations are published in Paragraph 6005 of FAA order 7400.9U, dated August 18, 2010, and effective September 15, 2010, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This proposed rulemaking is promulgated under the authority described in subtitle VII, part A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This proposed regulation is within the scope of that authority as it would establish Class E airspace at Martin Campbell Field Airport, Copperhill, TN.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

(a) The meetings will be informal in nature and will be conducted by one or more representatives of the FAA Western Service Area. A representative from the FAA will present a briefing on the planned Class B airspace area modification. Each participant will be given an opportunity to deliver comments or make a presentation, although a time limit may be imposed. Only comments concerning the plan to modify the Las Vegas Class B airspace will be accepted.

(b) The meetings will be open to all persons on a space-available basis. There will be no admission fee or other charge to attend and participate.

(c) Any person wishing to make a presentation to the FAA panel will be asked to sign in and estimate the amount of time needed for such presentation. This will permit the panel to allocate an appropriate amount of time for each presenter. These meetings will not be adjourned until everyone on the list has had an opportunity to address the panel.

(d) Position papers or other handout material relating to the substance of these meetings will be accepted. Participants wishing to submit handout material should present an original and two copies (3 copies total) to the presiding officer. There should be additional copies of each handout available for other attendees.

(e) These meetings will not be formally recorded. However, a summary of comments made at the meetings will be filed in the docket.

On July 21, 2010, President Obama signed the Dodd-Frank Act. 2 Title VII of the Dodd-Frank Act amends the CEA  3 to establish a comprehensive new regulatory framework for swaps. The legislation was enacted to reduce risk, increase transparency, and promote market integrity within the financial system by, among other things: (1) Providing for the registration and comprehensive regulation of swap dealers and major swap participants; (2) imposing clearing and trade execution requirements on standardized derivative products; (3) creating robust recordkeeping and real-time reporting regimes; and (4) enhancing the rulemaking and enforcement authorities of the Commission with respect to, among others, all registered entities and intermediaries subject to the Commission's oversight. Title VII also includes amendments to the Federal securities laws to establish a similar regulatory framework for security-based swaps under the authority of the Securities and Exchange Commission (“SEC”).

Section 754 of the Dodd-Frank Act provides that, unless otherwise provided, the provisions of subtitle A of Title VII  4 “shall take effect on the later of 360 days after the date of the enactment of this subtitle or, to the extent a provision of this subtitle requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provisions of this subtitle.” The date 360 days after the date of enactment is July 16, 2011.

To implement the Dodd-Frank Act, the Commission has to-date issued 53 advance notices of proposed rulemaking or notices of proposed rulemaking, two interim final rules, one final rule, and one proposed interpretive order. The regulatory requirements that have been proposed by the Commission present a substantially complete mosaic of the Commission's proposed regulatory framework under Title VII. In light of this substantially complete mosaic, the Commission reopened or extended the comment period of many of its proposed rulemakings in order to provide the public with an additional opportunity to comment on the proposed new regulatory framework for swaps, either in part or as a whole. 5 The extended comment period closed on June 3, 2011. The Commission also has solicited public comments on phasing of rule implementation ( i.e., identifying which requirements can be met sooner and which ones will take more time). 6

Section 712(d)(1) of the Dodd-Frank Act requires the Commission and the SEC to further define certain terms used in Title VII, including the terms “swap,” “swap dealer,” “major swap participant,” and “eligible contract participant.”  7 Section 721(c) requires the Commission to adopt a rule to further define the terms “swap,” “swap dealer,” “major swap participant,” and “eligible contract participant” to prevent evasion of statutory and regulatory obligations. 8 The Commission has issued two notices of proposed rulemaking that address these definitions. 9

The Commission's final rulemakings further defining the terms in sections 712(d) and 721(c) will not be in place as of July 16, 2011. Consequently, concerns have been raised about effects upon the swaps market during the period between July 16, 2011 and prior to the date(s) that those rulemakings have been completed. The Commission is proposing this relief to address these concerns and provide clarity to market participants upon the general effective date of the Dodd-Frank Act. The Commission reiterates its intent to “strive to ensure that current practices will not be unduly disrupted during the transition to the new regulatory regime.”  10

Section 712(f) of the Dodd-Frank Act authorizes the Commission to “promulgate rules, regulations, or orders permitted by this [Dodd-Frank] Act,” conduct studies and prepare reports, register persons, and “exempt persons, agreements, contracts, or transactions from the provisions of the Act, under the terms contained in this Act,” in order to prepare for the effective dates of the provisions of Title VII. Section 4(c) of the CEA, as amended by the Dodd-Frank Act, provides the Commission with authority to exempt certain agreements, contracts, and transactions that may otherwise be subject to the CEA from various provisions of the CEA. 11

The provisions of Title VII can be grouped into 4 major categories: (1) Provisions that require a rulemaking (for which relief is not being proposed); (2) self-effectuating provisions that reference terms that require further definition; (3) self-effectuating provisions that do not reference terms that require further definition and that repeal provisions of current law; and (4) self-effectuating provisions for which relief is not being proposed.

Section 754 specifies that unless otherwise provided in Title VII, provisions requiring a rulemaking become effective “not less than 60 days after publication of the final rule” (but not before July 16, 2011). Category 1 provisions, therefore, are not self-effectuating. A significant number of the Title VII provisions fall into this category. Examples of such provisions in Category 1 include new CEA section 4s(a) (governing registration of swap dealers and major swap participants), new CEA section 4s(e) (governing capital and margin requirements for swap dealers and major swap participants), and new CEA section 4s(h) (external business conduct standards for swap dealers and major swap participants). 12 The requirements in these provisions of the CEA will not become effective, at a minimum, until 60 days after publication of a final Commission rule (and not before July 16, 2011).

Because these provisions are not self-effectuating as of July 16, 2011, it is not necessary to provide relief with respect to Category 1 provisions as of July 16, and they are outside the scope of the proposed order. Similarly, Category 4 provisions also are outside the scope of the proposed order, and will go into effect on July 16, 2011. 13 Lists of Category 1 and Category 4 provisions prepared by Commission staff will be published on the Commission's Web site.

The proposed relief discussed herein is considered in two parts, each addressing one of the remaining Categories noted above: (1) Category 2—provisions that are self-effectuating ( i.e., do not require rulemaking) and reference terms that require further definition ( i.e., “swap,” “swap dealer,” “major swap participant,” or “eligible contract participant”); and (2) Category 3—provisions that are self-effectuating ( i.e., do not require rulemaking) and repeal provisions of current law, but that do not reference terms that require further definition. These parts are discussed, in turn, in the sections that follow.

Some provisions of Title VII that do not require a rulemaking and thus, under section 754, become effective on July 16, 2011, specifically reference the terms “swap,” “swap dealer,” “major swap participant,” or “eligible contract participant” (or other entities or instruments) which themselves are the subject of rulemakings for further definition under sections 712(d) and 721(c) of the Dodd-Frank Act. As discussed above, the final rulemakings on these further definitions will not be in place by July 16, 2011.

In response to requests from market participants for greater clarity regarding the applicability of various regulatory requirements to certain agreements, contracts, and transactions (referred to hereafter collectively as “transactions”) following the general effective date, 14 the Commission is proposing this temporary exemptive order pursuant to section 4(c) of the CEA. Specifically, for the Category 2 provisions described above, the Commission proposes to exempt persons and entities from the provisions of the CEA, as added or amended by the Dodd-Frank Act, that reference one or more of the terms regarding entities or instruments subject to further definition under sections 712(d) and 721(c) of the Dodd-Frank Act, including the terms “swap,” “swap dealer,” “major swap participant,” or “eligible contract participant.”  15 The proposed exemptive relief from such provisions would apply only with respect to those requirements or portions of such provisions that specifically relate to such referenced terms.

This proposed relief would not in any way limit the Commission's authority with respect to any person, entity, or transaction pursuant to CEA sections 2(a)(1)(B), 4b, 4o, 6(c), 6(d), 6c, 8(a), 9(a)(2), or 13, or the regulations of the Commission promulgated pursuant to such authorities, including CEA section 4c(b) proscribing fraud. 16 This relief would not apply to any provisions of Title VII and the CEA that have become effective prior to July 16, 2011  17 or Commission regulations already issued. Further, this relief would not affect any effective date set out in any specific Dodd-Frank Act rulemaking by the Commission. In addition, the proposed order would not limit the Commission's authority under section 712(f) of the Dodd-Frank Act to issue rules, orders, or exemptions prior to the effective date of any provision, in order to prepare for the effective date of such provision, provided that such rule, order, or exemption shall not become effective prior to the effective date of the provision. Finally, this proposed order would not affect the applicability of any provision of the CEA to futures contracts or options on futures contracts. 18

The proposed temporary exemptive relief would expire upon the earlier of: (1) The effective date of the applicable final rule further defining the relevant term; or (2) December 31, 2011. The Commission is proposing to limit this proposed relief to no more than a fixed period— i.e. December 31, 2011—for several reasons.

First, the Commission believes it appropriate and prudent to periodically review the extent and scope of any relief provided from the CEA, as amended by the Dodd-Frank Act. The Commission anticipates that additional rulemakings to implement the Dodd-Frank Act will be completed during this period of transitional relief. During this period the Commission also will be considering the appropriate phase-in of the various regulatory requirements under the Dodd-Frank rulemakings. Accordingly, the Commission believes it would be appropriate to periodically re-examine the scope and extent of the proposed exemptive relief in order to ensure that the scope of relief is appropriately tailored to the schedule of implementation of the Dodd-Frank Act requirements. 19

Second, the limitation of this exemptive relief to no more than a fixed period of time is consistent with similar limitations on transitional relief provided by the Congress elsewhere in Title VII. Section 723(c) of the Dodd-Frank Act allows persons to submit petitions to the Commission “to remain subject to section 2(h) of the [CEA].”  20 In acting upon such petitions, the Commission may allow persons to “continue operating subject to section 2(h) [of the CEA] for not longer than a 1-year period.” Similarly, section 734 authorizes the Commission to grant petitions for persons to remain subject to the provisions of section 5d of the CEA governing the operation of exempt boards of trade (“EBOTs”) “for up to 1 year after the effective date of this subtitle.”  21 In light of these provisions authorizing the Commission to provide transitional relief for no longer than a fixed period of time, the Commission believes it would be appropriate to provide transitional relief consistent with section 712(f) of the Dodd-Frank Act and CEA section 4(c) under this proposed order for no longer than a fixed time period.

The Commission nonetheless reiterates its intent that existing practices should not be unduly disrupted during any transition period. Moreover, the Commission reiterates its intent to deliberatively and efficiently proceed to complete the rulemakings to implement the Dodd-Frank Act. In the event that a further definitions rulemaking is completed prior to December 31, 2011, the Commission will at that time address the appropriate phase-in and implementation dates of the resulting regulatory requirements. Alternatively, should the proposed order expire at the end of the fixed time period—December 31, 2011—such expiration will not affect the Commission's ability to provide further relief, as appropriate, to avoid undue disruption or costs to market participants.

Currently, the CEA includes provisions that exclude or exempt, in whole or in part, certain transactions from Commission oversight under the CEA. These are as follows:

i. Section 2(d)(1), 22 transactions in excluded commodities  23 between eligible contract participants and not executed or traded on a trading facility;

ii. Section 2(d)(2), 24 principal-to-principal transactions in excluded commodities between certain eligible contract participants and executed or traded on an electronic trading facility;

iii. Section 2(g), 25 transactions subject to individual negotiation between eligible contract participants in commodities other than agricultural commodities and not executed or traded on a trading facility;

iv. Sections 2(h)(1)-(2), 26 transactions in exempt commodities  27 between eligible contract participants and not entered into on a trading facility;

v. Sections 2(h)(3)-(7), 28 principal-to-principal transactions in exempt commodities between eligible commercial entities (“ECEs”)  29 and executed or traded on an electronic trading facility (called exempt commercial markets, or “ECMs”);

vi. Section 5d, 30 transactions in commodities, among other things, having a nearly inexhaustible deliverable supply or no cash market, between eligible contract participants and traded on an EBOT; and

vii. Section 2(e), 31 which generally provides that nothing in the CEA governs or is applicable to an electronic trading facility that limits transactions authorized to be conducted on its facilities to those satisfying the requirements of sections 2(d)(2), 2(g) or 2(h)(3).

Under the Dodd-Frank Act, these provisions all will be removed from the CEA as of July 16, 2011. However, part 35 of the Commission's regulations will continue to be available with respect to transactions that meet the conditions therein, until such time as it may be withdrawn, amended, or replaced by the Commission.

Part 35 originally was promulgated in 1993 pursuant to the Commission's general exemptive authority in CEA section 4(c), and provides a broad-based exemption from the CEA for “swap agreements” in any commodity. Specifically, part 35 exempts “swap agreements,” as defined therein, from most of the provisions of the CEA if: (1) They are entered into by “eligible swap participants” (“ESPs”);  32 (2) they are not part of a fungible class of agreements standardized as to their material economic terms;  33 (3) the creditworthiness of any party having an actual or potential obligation under the swap agreement would be a material consideration in entering into or determining the terms of the swap agreement, including pricing, cost, or credit enhancement terms;  34 and (4) they are not entered into or traded on a multilateral transaction execution facility. 35 Accordingly, transactions that fully meet the conditions of part 35 are outside the scope of the proposed order. 36

However, because part 35 covers essentially non-standardized, non-cleared, non-exchange traded transactions, certain persons or entities that currently rely on the CEA exclusions or exemptions cited above may not qualify for part 35. In response to requests from market participants for greater clarity regarding the applicability of various statutory and regulatory requirements to certain transactions following the general effective date, the Commission, pursuant to its authority under section 4(c) of the CEA, is proposing to grant relief for those transactions that satisfy the conditions specified below.

Specifically, the Commission is proposing to temporarily exempt a transaction in exempt or excluded commodities (and any person or entity offering or entering into such transaction) from the CEA (other than the anti-fraud and anti-manipulation enforcement provisions identified below) following the general effective date if the transaction otherwise would comply with part 35, notwithstanding that: (1) The transaction may be executed on a multilateral transaction execution facility; (2) the transaction may be cleared; (3) persons offering or entering into the transaction may be eligible contract participants as defined in the CEA (prior to July 16, 2011); (4) the transaction may be part of a fungible class of agreements that are standardized as to their material economic terms; and/or (5) no more than one of the parties to the transaction is entering into the transaction in conjunction with its line of business, but is neither an eligible contract participant nor an ESP, and the transaction was not and is not marketed to the public (the “line of business provision”). 37

As noted above, this proposed temporary exemptive relief would not affect the availability of either part 35 or part 32 with respect to transactions that fully meet the conditions therein. 38 For transactions that fall outside of existing part 35 or part 32, this relief would only be available to the extent those transactions (and persons offering or entering into such transactions) fall within the scope of any of the existing CEA sections 2(d), 2(e), 2(g), 2(h), and 5d as in effect prior to July 16, 2011  39 or the line of business provision.

With respect to any transaction within the scope of the proposed order, the proposed exemptive relief would not in any way limit the Commission's authority with respect to any person, entity, or transaction pursuant to CEA sections 2(a)(1)(B), 4b, 4o, 6(c), 6(d), 6c, 8(a), 9(a)(2) or 13, or the regulations of the Commission promulgated pursuant to such authorities, including CEA section 4c(b) proscribing fraud. 40 Additionally, this proposed relief would not affect any Dodd-Frank Act implementing regulations (and any implementation period contained therein) that the Commission promulgates and applies to the subject transactions, market participants, or markets. 41 This proposed temporary exemptive relief would expire upon the earlier of: (1) December 31, 2011; or (2) the repeal or replacement of part 35 or part 32, as applicable. The Commission is proposing to provide this exemptive relief in part two of the proposed order for no longer than a fixed period of time for the same reasons as described above with respect to part one of the proposed order.

Section 4(c)(1) of the CEA  42 authorizes the CFTC to exempt any transaction or class of transactions (including any person or class of persons offering, entering into, rendering advice or rendering other services with respect to, the transaction) from any of the provisions of the CEA (subject to certain exceptions). Pursuant to section 4(c)(2), the Commission must determine that: (1) The exemption is appropriate for the transactions and consistent with the public interest; (2) the exemption is consistent with the purposes of the CEA; (3) the transaction will be entered into solely between “appropriate persons;”  43 and (4) the exemption will not have a material adverse effect on the ability of the Commission or any contract market to discharge its regulatory or self-regulatory responsibilities under the CEA. 44 The Commission may grant such an exemption by rule, regulation or order, after notice and opportunity for hearing, and may do so on application of any person or on its own initiative. Further, the Commission may grant such an exemption either conditionally or unconditionally, or for stated periods within the Commission's discretion. Finally, section 712(f) of the Dodd-Frank Act authorizes the Commission to “exempt persons, agreements, contracts, or transactions from the provisions of the [Dodd-Frank] Act, under the terms contained in” the Dodd-Frank Act, in order to prepare for the effective dates of the provisions of Title VII.

In enacting section 4(c), Congress noted that the goal of the provision “is to give the Commission a means of providing certainty and stability to existing and emerging markets so that financial innovation and market development can proceed in an effective and competitive manner.”  45 The proposed relief is intended to provide clarity and stability to the markets and market participants concerning the applicability of the provisions of the CEA, as added or amended by the Dodd-Frank Act (in part one), and the current provisions of the CEA as repealed by the Dodd-Frank Act (in part two), upon the general effective date of the Dodd-Frank Act, thereby avoiding or minimizing undue and unwarranted disruptions to the markets.

The Commission notes that the proposed order is temporary in scope and reserves the Commission's anti-fraud and anti-manipulation enforcement authority. As such, the Commission believes that the proposed order would be consistent with the public interest and purposes of the CEA. The Commission also believes the order to be limited to appropriate persons, including persons in current registration categories for which the Dodd-Frank Act expanded the definition to include activities relating to swaps ( e.g., introducing brokers, commodity pool operators, commodity trading advisors, and associated persons thereof). 46 The proposed order will not have a material adverse effect on the ability of the Commission or any contract market to discharge its regulatory or self-regulatory duties under the CEA.

The Commission seeks comment on whether the proposed temporary exemptions are consistent with the public interest and other requirements of CEA section 4(c).

The Commission requests comment on all aspects of this proposed temporary exemptive order.

The Paperwork Reduction Act (“PRA”)  47 imposes certain requirements on Federal agencies (including the Commission) in connection with conducting or sponsoring any collection of information as defined by the PRA. This proposed temporary exemptive order, if approved, would not require a new collection of information from any persons or entities that would be subject to the proposed order.

Section 15(a) of the CEA  48 requires the Commission to consider the costs and benefits of its action before issuing an order under the CEA. By its terms, section 15(a) does not require the Commission to quantify the costs and benefits of an order or to determine whether the benefits of the order outweigh its costs. Rather, section 15(a) simply requires the Commission to “consider the costs and benefits” of its action.

Section 15(a) of the CEA further specifies that costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission may in its discretion give greater weight to any one of the five enumerated areas and could in its discretion determine that, notwithstanding its costs, a particular order is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the CEA.

As discussed above, the Commission is proposing that the scope of this temporary exemptive relief be limited to persons who are “appropriate persons” as set forth in section 4(c) of the Act. Further, this proposal does not affect the Commission's existing and future anti-fraud and anti-manipulation authorities, including CEA sections 2(a)(1)(B), 4b, 4o, 6(c), 6(d), 6c, 8(a), 9(a)(2), or 13, or the regulations of the Commission promulgated pursuant to such authorities, including section 4c(b) proscribing fraud. The Commission believes that market participants and the public will benefit from the clarity offered by the proposed temporary exemptive relief, while maintaining the Commission's authorities regarding the prevention and deterrence of fraud and manipulation. With respect to costs, the Commission believes that the exemptive relief imposes no affirmative duties or obligations on market participants and the public. The temporary exemptive relief does not contain any requirement to create, retain, submit, or disclose any information. Furthermore, the exemptive relief imposes no recordkeeping or related data retention or disclosure requirements on any person, including small businesses. Consequently, the Commission finds it unlikely that the exemptive relief will impose any additional costs beyond the existing costs associated with ongoing operations, including those that ensure that behavior and statements are not fraudulent or manipulative.

Although the Dodd-Frank Act establishes a comprehensive new regulatory framework for swaps, the Commission's work to implement that framework will not be complete as of July 16, 2011. Accordingly, this relief offers the benefit of greater clarity in the swaps market that is in the interest of both the markets and the public. Accordingly, the Commission believes that this temporary exemptive relief is an appropriate measure to facilitate a transition to the comprehensive new regulatory framework for swaps set out in Title VII of the Dodd-Frank Act. Such an orderly transition will promote market efficiency, competition, and financial integrity.

As stated above, the temporary relief proposed here is designed to maintain the functioning of the markets until such time as the comprehensive new regulatory framework for swaps set forth in the Dodd-Frank Act is in place. With the clarity offered by the proposed exemptive relief, markets would function better as venues for price discovery.

Appropriate persons covered by this proposal would be subject to the Commission's full array of existing anti-fraud and anti-market manipulation provisions and certain new authorities provided under the Dodd-Frank Act. Market participants and the public will benefit substantially from the continuing protection through the prevention and deterrence of fraud and manipulation. Markets protected from fraud and manipulation function better as venues for price discovery and risk management.

The proposed exemptive order is temporary and limited. It would not affect the applicability of any provision of the CEA to futures contracts, options on futures contracts, or transactions with retail customers in foreign currency or other commodities pursuant to CEA section 2(c)(2). Further, it would expire at an appropriate date, as discussed above. The expiration provision would permit the Commission to ensure that the scope and extent of exemptive relief is appropriately tailored to the schedule of implementation of the Dodd-Frank Act requirements.

After considering these factors, the Commission has determined to seek comment on the proposed temporary exemptive order, as discussed above. The Commission seeks comment on all aspects of the foregoing proposed application of the cost-benefit considerations set forth in CEA section 15(a). Commenters also are invited to submit any data or other information that they may have quantifying or qualifying the costs and benefits of the proposal with their comment letters.

Pursuant to its authorities in Section 7 of the Rivers and Harbors Act of 1917 (40 Stat 266; 33 U.S.C. 1) and Chapter XIX of the Army Appropriations Act of 1919 (40 Stat 892; 33 U.S.C. 3) the Corps is proposing to amend the regulations in 33 CFR part 334 by modifying the regulations for existing danger zones that are located immediately adjacent to the U.S. Marine Corps Recruit Depot at Parris Island, South Carolina. The proposed modifications to the regulations are described below.

The proposed modifications include reformatting the existing regulations to describe the areas, the regulations, and enforcement. The proposed format is consistent with other danger zone regulations and provides greater clarity. The boundaries of both areas have been modified to incorporate modern methods of measuring ballistic footprints and design criteria for range construction. Since the proposed changes to the boundaries of the areas are relatively minor, the existing live fire warning signs will continue to be used to ensure safe navigation in the vicinity of the rifle and pistol ranges.

The proposed regulations allow the Commanding General, U.S. Marine Corps Recruit Depot, Parris Island South Carolina Director, to restrict passage of persons, vessels and other watercraft in navigable waters adjacent to the existing rifle range and pistol range between the hours of 6 a.m. and 5 p.m. Monday through Friday, and from 6 a.m. to 12 p.m. on Saturdays, National holidays excepted, and at other times as designated and properly published by the Commanding General, U.S. Marine Corps Recruit Depot Parris Island.

The proposed regulations would result in an increase in the hours of operation from 6:30 a.m. to 5 p.m., to 6 a.m. to 5 p.m. Monday through Friday. Existing procedures for publishing any temporary changes in the hours of operation include sending a notice to local news sources, marinas, and fishing shops. The public will continue to be able to use these portions of Archers Creek, Ribbon Creek, and the Broad River when the rifle and pistol ranges are not in use.

a. Review Under Executive Order 12866. This proposed rule is issued with respect to a military function of the Department of Defense and the provisions of Executive Order 12866 do not apply.

b. Review Under the Regulatory Flexibility Act. The proposed rule has been reviewed under the Regulatory Flexibility Act (Pub. L. 96-354) which requires the preparation of a regulatory flexibility analysis for any regulation that will have a significant economic impact on a substantial number of small entities (i.e., small businesses and small governments). The Corps determined that this regulation would have little or no economic impact on the public nor would it result in any anticipated navigational hazard or interference with existing waterway traffic. This regulation will have no significant economic impact on small entities.

c. Review Under the National Environmental Policy Act. Due to the administrative nature of this action and because there is no intended change in the use of the area, the Corps expects that this regulation, if adopted, will not have a significant impact to the quality of the human environment and, therefore, preparation of an environmental impact statement will not be required. An environmental assessment will be prepared after the public notice period is closed and all comments have been received and considered. It will be available from the District office listed at the end of FOR FURTHER INFORMATION CONTACT, above.

d. Unfunded Mandates Act. This proposed rule does not impose an enforceable duty among the private sector and, therefore, is not a Federal private sector mandate and is not subject to the requirements of Section 202 or 205 of the Unfunded Mandates Reform Act (Pub. L. 104-4, 109 Stat. 48, 2 U.S.C. 1501 et seq. ). We have also found under Section 203 of the Act, that small governments will not be significantly or uniquely affected by this regulation.

For the reasons set out in the preamble, the Corps proposes to amend 33 CFR part 334 as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

When submitting comments, remember to:

1. Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).

2. Follow directions—EPA may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

3. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

4. Describe any assumptions and provide any technical information and/or data that you used.

5. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

6. Provide specific examples to illustrate your concerns, and suggest alternatives.

7. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

8. Make sure to submit your comments by the comment period deadline identified.

On December 3, 2010, IDEM submitted a draft SIP revision request to EPA to establish appropriate emission thresholds for determining which new or modified stationary sources become subject to Indiana's PSD permitting requirements for GHG emissions. Final approval of this SIP revision request will be consistent with the provisions of EPA's Tailoring Rule, 1 which established appropriate GHG emission thresholds for determining the applicability of PSD requirements to GHG-emitting sources, ensuring that smaller GHG sources emitting less than these thresholds are not subject to permitting requirements. Pursuant to section 110 of the CAA, EPA is proposing to approve this revision into the Indiana SIP.

Because this draft SIP revision is not yet state-effective, Indiana requested that EPA “parallel process” the SIP revision. Under this procedure, the EPA Regional Office works closely with the state while developing new or revised regulations. Generally, the state submits a copy of the proposed regulation or other revisions to EPA before concluding its rulemaking process. EPA reviews this proposed state action and prepares a proposed rulemaking action. EPA publishes this proposed rulemaking in the Federal Register and solicits public comment in approximately the same timeframe during which the state finalizes its rulemaking process.

After Indiana submits the formal state-effective SIP revision request, EPA will prepare a final rulemaking action for the SIP revision. If changes are made to the SIP revision after EPA's proposed rulemaking, such changes must be acknowledged in EPA's final rulemaking action. If the changes are significant, then EPA may be obliged to repropose the action.

This section briefly summarizes EPA's recent GHG-related actions that provide the background for this proposed action. More detailed discussion of the background is found in the preambles for those actions. In particular, the background is contained in what we call the GHG PSD SIP Narrowing Rule, 2 and in the preambles to the actions it cites.

This document describes several possible approaches for obtaining certain additional information on the composition of pesticide products. The notice focuses particularly on information about what nanoscale materials are present in registered pesticide products. In connection with this document, EPA describes “nanoscale material” as an active or inert ingredient and any component parts thereof intentionally produced to have at least one dimension that measures between approximately 1 and 100 nanometers (nm).

Under one approach, EPA would use section 6(a)(2) of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) to obtain information regarding what nanoscale material is present in a registered pesticide product and its potential effects on humans or the environment. If EPA adopts this approach, 40 CFR 152.50(f)(3) would also require the inclusion of such information with any application for registration of a pesticide product that contains a nanoscale material.

Under an alternative approach, EPA would obtain such information using Data Call-In notices (DCIs) under FIFRA section 3(c)(2)(B). If EPA adopts this alternate approach, EPA would also need to require the inclusion of this information with any application for registration of a pesticide product that contains a nanoscale material. EPA is reviewing whether this could be done under existing regulations or whether EPA would need to amend existing regulations to clarify that the information is required with any application for registration.

It is EPA's view that FIFRA section 6(a)(2) is the most efficient and expedient administrative approach to obtaining information about nanoscale materials in pesticides and EPA would prefer to use this approach.

This document also proposes a new approach for how EPA will determine on a case-by-case basis whether a nanoscale active or inert ingredient is a “new” active or inert ingredient for purposes of FIFRA and the Pesticide Registration Improvement Act (PRIA), even when an identical, non-nanoscale form of the nanoscale ingredient is already registered.

After considering any public comments on the use of FIFRA section 6(a)(2) or DCIs under FIFRA section 3(c)(2)(B), as well as public comments submitted in response to other questions posed in this document, EPA plans to issue a subsequent document in the Federal Register announcing its approach to gather this information. EPA is also asking for specific input on the proposed approach for determining whether a nanoscale material is “new” under FIFRA and PRIA.

This action is directed to those persons who manufacture, distribute, sell, apply, or regulate pesticide products, including agricultural, commercial, and residential products (NAICS codes 32532 and 32561). This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

1. Submitting CBI. Do not submit this information to EPA through regulations.gov or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2. Tips for preparing your comments. When submitting comments, remember to:

i. Identify the document by docket ID number and other identifying information (subject heading, Federal Register date and page number).

ii. Follow directions. The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

iii. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

iv. Describe any assumptions and provide any technical information and/or data that you used.

v. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

vi. Provide specific examples to illustrate your concerns and suggest alternatives.

vii. Explain your views as clearly as possible.

viii. Make sure to submit your comments by the comment period deadline identified.

As a general matter, pesticides may not be sold or distributed in the United States unless they are registered with EPA. FIFRA section 3(a) (7 U.S.C. 136a(a)). In order to obtain a pesticide registration, an applicant must provide EPA with data (or cite existing data) demonstrating that the proposed registration complies with the requirement for registration. FIFRA section 3(c)(1)(F) (7 U.S.C. 136a(c)(1)(F)). FIFRA contains two provisions under which EPA may register pesticides: Section 3(c)(5) for “unconditional” registration and section 3(c)(7) for “conditional” registration (7 U.S.C. 136a(c)(5) and 7 U.S.C. 136a(c)(7)). Importantly, EPA must make statutorily required findings for each and every pesticide product for which registration is sought, regardless of whether another pesticide product with the same or similar composition and use patterns is already registered.

The standard for determining whether an application should be granted unconditionally is found in FIFRA section 3(c)(5). This section provides that, in order to grant a registration, EPA must find that a product's composition warrants the proposed claims for it; that the product's labeling and other material required to be submitted comply with FIFRA; that the product will perform its intended function without causing unreasonable adverse effects on the environment; and that, when used in accordance with widespread and commonly recognized practice, the product will not cause unreasonable adverse effects on the environment.

FIFRA defines “unreasonable adverse effects on the environment” as including “any unreasonable risk to man or the environment, taking into account the economic, social, and environmental costs and benefits of the use of any pesticide.” FIFRA section 2(bb) (7 U.S.C. 136(bb)). Thus, a critical aspect of determining whether or not a pesticide product should be granted a registration is an evaluation of whether the benefits associated with the use of a pesticide outweigh the risks associated with such use. The burden of demonstrating that a product meets the standards for registration rests at all times on the registrant or applicant for registration. See, e.g., Industrial Union Dept. v. American Petroleum Institute, 448 U.S. 607, 653 n. 61 (1980); Environmental Defense Fund v. EPA, 510 F.2d 1292, 1297, 1302 (DC Cir. 1975).

The Agency has promulgated regulations in 40 CFR parts 158 and 161 which identify the types of data EPA expects an applicant to provide to support an application for registration of a pesticide product. The Agency requires a wide variety of studies in order to evaluate whether a pesticide will cause unreasonable adverse effects on the environment. These required studies include both toxicity tests and data to characterize exposure to a pesticide, including extensive information on a product's composition, and its fate in the environment and within the human body. For certain pesticides EPA also requires data on product efficacy.

If an applicant cannot provide necessary data for EPA to make the determinations required to register a product unconditionally under FIFRA section 3(c)(5), EPA may still be able to register the product “conditionally” under FIFRA section 3(c)(7). FIFRA section 3(c)(7) authorizes EPA to register a pesticide product on the condition that the applicant provides additional data necessary to support a finding that the product meets the statutory standards in FIFRA section 3(c)(5). FIFRA section 3(c)(7) authorizes conditional registration in three circumstances. First, the Agency may conditionally register a product if EPA determines, among other things, that the product is identical or substantially similar to a currently registered pesticide or differs only in ways that would not significantly increase the risk of unreasonable adverse effects on the environment, and that approving the registration in the manner proposed would not significantly increase the risk of any unreasonable adverse effect on the environment. FIFRA section 3(c)(7)(A) (7 U.S.C. 136a(c)(7)(A)). Products approved under this authority are commonly called “me-too registrations.” Second, EPA may register a pesticide for an additional use, if the applicant provides data to evaluate the safety of the new use, and use of the product would not significantly increase the risk of unreasonable adverse effects on the environment compared to products already registered. FIFRA section 3(c)(7)(B) (7 U.S.C. 136a(c)(7)(B)). These product approvals are referred to as “new use” registrations. Finally, EPA may conditionally register a pesticide product that contains an active ingredient not present in any currently registered pesticide product, if the Administrator determines that:

As with applications for unconditional registrations, applicants for conditional registration bear the burden at all times of demonstrating that the statutory standards are met.

The Agency's interest in data to evaluate the risks and benefits of a pesticide does not necessarily end once EPA has registered a pesticide product. Accordingly, other provisions of FIFRA allow the Agency to require pesticide registrants to develop and submit information the Agency believes it needs in order to maintain the registration of pesticide products.

Under FIFRA section 3(c)(2)(B), EPA may send a DCI notice to a registrant requiring the registrant to provide additional data or other information, which the registrant may need to generate or compile. Specifically, “if the Administrator determines that additional data are required to maintain in effect an existing registration of a pesticide, the Administrator shall notify all existing registrants of the pesticide to which the determination relates and provide a list of such registrants to any interested person.” Failure to respond to the DCI can serve as the basis for suspending the registration of the product, thereby making it unlawful for the registrant to sell or distribute the pesticide.

Generally, EPA's determination that additional data are needed is contemplated to occur for one of the following five reasons:

1. The Re-registration Program. Section 4 of FIFRA requires EPA to re-assess the health and safety data for all pesticide active ingredients registered before November 1, 1984, to determine whether these “older” pesticides meet the criteria for registration that would be expected of a pesticide being registered today for the first time. Section 4 of FIFRA directs EPA to use section 3(c)(2)(B) authority to obtain the required data.

2. The Registration Review Program. Section 3(g) of FIFRA contains provisions to help achieve the goal of reviewing each pesticide every 15 years to assure that the pesticide continues to pose no risk of unreasonable adverse effects on human health or the environment. Section 3(g) instructs EPA to use the section 3(c)(2)(B) authority to obtain the required data.

3. Anticipated Residue/Percent Crop Treated Information. Under section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), before a pesticide may be used on food or feed crops, the Agency must establish a tolerance for the pesticide residues on that crop or establish an exemption from the requirement to have a tolerance. Section 408(b)(2)(E) and (F) of FFDCA authorize the use of anticipated or actual residue (AR) data and percent crop treated (PCT) data to establish, modify, maintain, or revoke a tolerance for a pesticide. FFDCA requires that if AR data are used, data must be reviewed 5 years after a tolerance is initially established.

4. The Special Review Program. EPA may conduct a Special Review if EPA believes that a pesticide poses risks of unreasonable adverse effects on human health or the environment. In the Special Review Program, EPA focuses on specific hazards or uses of a pesticide. Special Reviews are not intended to be comprehensive evaluations of the pesticide; instead the Special Review DCIs are to address the specific hazard or exposure concerns that are at issue.

5. Enforcement and Unanticipated Circumstances. The need for a DCI may arise from the discovery of deficiencies in previously submitted data, or from the discovery of specific attributes of the pesticide or its ingredients. This may lead the Agency to determine that additional information is necessary to reassess whether the pesticide will cause unreasonable adverse effects on the environment. This type of DCI is needed because the concern and therefore the need for data arise not from a mandated review program like Re-registration or Registration Review described above, but from unanticipated circumstances. Section 3(c)(2)(B) of FIFRA provides a means of obtaining any needed data.

FIFRA section 6(a)(2) provides that registrants must inform the Agency of relevant information relating to their products, even though it was not specifically requested by EPA. Specifically, FIFRA section 6(a)(2) requires that, “[i]f at any time after the registration of a pesticide the registrant has additional factual information regarding unreasonable adverse effects on the environment of the pesticide, the registrant shall submit such information to the Administrator.” (7 U.S.C. 136d(a)(2)). For over 30 years, EPA has interpreted this provision expansively to include not only information relating directly to adverse effects caused by pesticides, but also to other types of information and studies that EPA would typically use in assessing whether a pesticide meets the statutory standard for registration ( i.e., the “unreasonable adverse effects on the environment” risk/benefit standard). See 43 FR 37611 (August 23, 1978).

In 1997, EPA promulgated a final rule at 40 CFR part 159, subpart D in the Federal Register issue of September 19, 1997 (62 FR 49370) (FRL-5739-1), setting forth EPA's interpretation and enforcement policy regarding FIFRA section 6(a)(2). The rule explains, among other things, what information EPA regards as “additional” and “factual,” as well as how quickly and to whom such information must be reported. The regulation specifies many kinds of information, from varied scientific disciplines, that EPA requires registrants to submit pursuant to FIFRA section 6(a)(2). The types of information reflect the variety of scientific data used by EPA in making the statutorily required determinations—whether pesticides cause unreasonable adverse effects on the environment. Thus, for example, the regulations generally require registrants to report studies indicating that a pesticide causes new or a higher incidence of toxic effects than previously identified (see 40 CFR 159.165) and to report incidents involving injury to humans, pets, or wildlife resulting from exposure to a pesticide (40 CFR 159.184). But, EPA uses other types of information that do not directly demonstrate adverse effects in its risk assessments, and new factual information of this kind is also reportable under the regulation. For example, registrants must report studies that identify new metabolites, degradates, impurities, or contaminants of pesticides (40 CFR 159.179); certain information on the detection of pesticide residues in water, food, and feed (40 CFR 159.178); and new studies of human exposure (40 CFR 159.170). In sum, EPA's regulation requires reporting of many types of information relevant to EPA's assessment of the safety of a pesticide product—in the words of section 6(a)(2) “information regarding unreasonable adverse effects on the environment of the pesticide”—not merely information that directly concerns adverse effects.

In promulgating that regulation, however, EPA also recognized it was impossible to establish rules addressing every type of factual information that might become relevant in the future to judging whether a registered pesticide product continued to meet the FIFRA statutory standards. Accordingly, 40 CFR 159.195(a) provides:

Finally, EPA promulgated a regulation at 40 CFR part 152 addressing the submission of applications for registration (53 FR 15952, May 4, 1988) (FRL-3266-9b). That rule specifies, among other things, certain types of information that an application for registration of a pesticide product must contain. The rule provides that the applicant must “furnish with his application any factual information of which he is aware regarding unreasonable adverse effects of the pesticide on man or the environment, which would be required to be reported under FIFRA section 6(a)(2), if the product were registered.” 40 CFR 152.50(f)(3).

Registrants' compliance with FIFRA section 6(a)(2) and EPA's implementing regulations in 40 CFR parts 152 and 159 ensures that EPA has access to any additional factual information that could be important for determining whether a previous Agency decision to register a pesticide remains a correct one, and whether a registered pesticide can in fact be used without posing unreasonable adverse effects to human health and the environment. This provision of FIFRA recognizes that registrants may come into the possession of important new information that was not anticipated by the Agency or of information the importance of which was not previously known, and that in the absence of registrants submitting such information, EPA might well remain unaware of the information. Failures to report required information, or delays in reporting, are regarded by EPA as violations of FIFRA section 6(a)(2), which in turn makes them actionable under FIFRA sections 12(a)(2)(B)(ii) and 12(a)(2)(N) (7 U.S.C. 136j(a)(2)(B)(ii) and 7 U.S.C. 136j(a)(2)(N)).

EPA believes that certain information concerning pesticide ingredients, which applicants and registrants have not routinely provided previously, is relevant to the Agency's statutory obligation to determine whether the registration of a pesticide may cause unreasonable adverse effects on the environment. For the reasons discussed below, EPA is particularly interested in nanoscale materials in this context. Accordingly, EPA is considering how to collect information about what nanoscale materials are in pesticide products and is therefore soliciting public comment on two possible approaches. It is important to first clarify how the term “nanoscale material” is being used for purposes of this document.

To date, EPA has not developed formal definitions for the terms “nanotechnology” or “nanoscale materials” or any similar terms for regulatory purposes under any statute administered by the Agency. Broad definitions for the terms “nanotechnology” or “nanoscale materials” and discussions of nanotechnology generally reflect the same common elements, namely:

1. The material's particle size measures typically between approximately 1 and 100 nm in at least one dimension;

2. The material exhibits unique or novel properties compared to larger particles of the same material; and

3. Rather than occurring naturally, the material has been manufactured or engineered at the nanoscale to take advantage of these unique properties. See, for example, the definition from the National Nanotechnology Initiative at: http://www.nano.gov/html/facts/whatIsNano.html.

These elements do not readily work in a regulatory context because of the high degree of subjectivity involved with interpreting such phrases as “unique or novel properties” or “manufactured or engineered to take advantage of these properties.” Moreover, the contribution of these subjective elements to risk has not been established.

Instead, OPP will focus on more objective criteria in describing when information about a “nanoscale material” in a pesticide product may be relevant to determining whether the product has an unreasonable adverse environmental effect. Specifically, such information may be relevant in this context when the active or inert ingredient and any component parts thereof is intentionally produced to have at least one dimension that measures between approximately 1 and 100 nanometers, regardless of the aggregation or agglomeration state of the final material.

In determining whether an ingredient meets this description, EPA may review particle size data and, among other things, the manufacturing process to determine whether it employs processes specifically to create or enhance the proportion of nanoscale materials in the product, as compared with other processes used to produce similar products. The Agency generally expects that these ingredients may comprise, but are not limited to, metal-based ( e.g., silver) and carbon-based ( e.g., carbon nanotubes) nanoscale materials. The Agency does not, however, intend this description to cover biological materials ( e.g., DNA, RNA, proteins) or materials in their natural state ( e.g., clays). To the extent that the application of this description to a particular product or ingredient is unclear, EPA would review information provided by a registrant or applicant concerning the composition of the pesticide product and to provide an Agency view on whether the product did (or did not) contain a nanoscale material for purposes of this policy.

There is a growing body of scientific evidence showing that differences can exist between nanoscale material(s) and their non-nanoscale counterpart(s) (Ref. 1). Nanoscale materials may have different or enhanced properties—for example, electrical, chemical, magnetic, mechanical, thermal, or optical properties—or features, such as improved hardness or strength, that are highly desirable for applications in commercial, medical, military, and environmental sectors (Ref. 2). These properties are a direct consequence of small size, which results in a larger surface area per unit of volume and/or quantum effects that occur at the nanometer scale ( i.e., 1 x 0 −9 meters). Small size itself is also a desirable property of nanoscale materials that is exploited for miniaturization of applications/processes and/or stabilization or delivery of payloads to diverse environments or incorporation into diverse products.

Nanoscale materials have a range of potentially beneficial public and commercial applications, including medicine and public health, clean energy through more efficient solar panels, pollution reduction and environmental cleanup, and improved products such as stronger, lighter, and more durable or conductive materials. These benefits arise from the distinctive properties of nanoscale materials, in that they are potentially more interactive or durable than other chemicals as a result of their size and composition. EPA sees the emergence of nanoscale materials as offering potential benefits for society in many different fields, including pest control products. The use of nanoscale materials in pesticide products and treated articles may allow for more effective targeting of pests, use of smaller quantities of a pesticide, and minimizing the frequency of spray-applied surface disinfection. These could contribute to improved human and environmental safety and could lower pest control costs. For example, as a materials preservative, nanosilver should maintain its efficacy longer and require smaller quantities than other silver preservatives due to an expected gradual and controlled release of silver as opposed to the rapid release of for example, silver from a zeolite structure or the immediate dissolution of a silver salt. Therefore EPA seeks to encourage innovative work in developing nanoscale materials to realize these benefits.

However, a number of organizations have considered whether the small size of nanoscale materials or the unique or enhanced properties of nanoscale materials may, under specific conditions, pose new or increased hazards to humans and the environment. Government, academic, and private sector scientists in multiple countries are performing research into the human health effects of diverse nanoscale materials, resulting in a substantial and rapidly growing body of scientific evidence. Recently, governmental and expert peer review organizations have reviewed and summarized this evidence and offered views about the implications of this evidence for environmental and human health and safety.

For instance, in 2009, the National Institute of Occupational Safety and Health (NIOSH) issued a report, “Approaches to Safe Nanotechnology: Managing the Health and Safety Concerns Associated with Engineered Nanomaterials,” which summarized the available scientific information about nanoscale materials and identified the following potential health and safety properties:

Earlier the same year, the Scientific Committee on Emerging and Newly Identified Health Risks (SCENIHR), an independent scientific committee advising the European Commission's Health and Consumer Directorate, issued a report, “Risk assessment of products of nanotechnologies.” The SCENIHR report identified properties similar to those identified in the NIOSH report:

In another recent survey of scientific research on nanoscale materials, the authors reported:

Other reports in the scientific literature have indicated that some nanoscale materials may cross the placental barrier (Ref. 6) or translocate to diverse organs following oral exposure (Ref. 7). Once in these diverse sites and organs, the large surface area of nanoscale materials may facilitate increased reactivity and/or an inflammatory response, resulting in toxic effects.

Two recent literature surveys describe a broad range of effects in non-mammalian species following exposure to nanoscale materials (Refs. 8 and 9). These include, for example, increased ventilation rates, mucus production, and pathologies, and related alteration of enzyme activities and indicators of oxidative stress in rainbow trout, Oncorhyncus mykiss (Refs. 10 and 11), and ingestion and accumulation of nanoscale material in the digestive tract, as well as mortality, increased heart rates, and reduced fecundity in Daphnia magna (Refs. 12, 13, and 14). Translocation of nano-scale materials from gill and gut surface to blood and other organs in exposed Medaka, Oryzius latipes, has also been reported (Ref. 15) and carbon nanotubes, although unable to cross the egg surface, have been shown to delay hatching in zebrafish, Danio rerio (Ref. 16). A recent review of lethal effects and concentrations determined for a wide variety of species showed that some nanoscale materials, including nano-titanium, nano-zinc oxide, nano-silver, nano-copper oxide, C60, and single- and multi-walled carbon nanotubes, would be classified as harmful to extremely toxic to non-mammalian species (Ref. 17).

While the reports and articles cited previously have focused primarily on differences between nanoscale material and conventionally sized material of the same substances, EPA has also consulted with the FIFRA Scientific Advisory Panel (SAP) on the extent to which different types of nanoscale materials may display different properties. (The SAP is a Federal advisory committee consisting of external, independent, expert, scientific peer reviewers who provide advice to EPA on scientific issues involved in the regulation of pesticides.) In response to EPA questions on how size and other properties of nanoscale materials potentially affect risk and how to assess such risks, the SAP said: “Existing data clearly indicate that many properties of particles change with size, including rate of release of ionic forms of metal, reactivity or catalytic efficiency, Plasmon resonance, and quantum effects. * * * The effect of particle size on biological responses to particle exposure is less well defined.” (Ref. 18). The SAP also noted that “[o]ther physicochemical properties, such as shape, charge and surface coating, are also likely to impact biological response and environmental fate [of nanoscale materials]. * * * The lack of a clear understanding of how particle size and other physical properties affect hazard profiles led most Panel members to be unsupportive of bridging among silver-based materials with different properties.” (Ref. 18).

It is important to emphasize that, while the conclusions described previously apply to the specific material(s) and or context in which the study was conducted, any individual type of nanoscale material may not display all or even any of the characteristics observed and reported for other nanoscale materials. In other words, some nanoscale materials may have properties which, for purposes of assessing the risk of a pesticide, are essentially identical to larger sized materials (or particles) of the same substance. Furthermore, nanoscale materials may also have properties that make them less risky, or more beneficial in some other way, than larger sized materials (or particles) of the same substance. So, it appears increasingly likely that there are few, if any, universal “nanoscale” effects, and the distinctive effects seen at nanoscale are specific to the properties of each material type under specific exposure scenarios. Thus, EPA does not regard the fact that an ingredient meets our description of a nanoscale material as evidence that a pesticide containing the ingredient would cause unreasonable adverse effects on the environment and thus would no longer meet the statutory standards for registration. Rather, the presence of a nanoscale material in a pesticide is grounds for EPA to consider the possible need for data to characterize the potential of the ingredient to pose risks. However, the registration status of a product would not change merely as a result of providing information to EPA about the presence of a previously-unreported nanoscale material. If, based on a science based assessment of the risks of the specific pesticide ingredients involved, EPA were to determine that the pesticide no longer met the criteria for registration, or that some change was needed in the conditions of use, EPA would conduct a separate action to notify the manufacturer of that determination, consistent with current FIFRA regulations.

Finally, scientifically speaking, there currently is no bright line with respect to a size below (or above) which nanoscale materials do (or do not) exhibit properties that might be of interest in assessing whether a pesticide product has the potential to cause unreasonable adverse effects on the environment. Therefore, the precise size range in nanometers addressed by the policies proposed in this document might be revised in the future as new information becomes available.

The Agency has information indicating that the use of nanotechnology has started to expand into pesticide products, as it already has in many other fields. For instance, a number of companies have contacted EPA expressing an interest in obtaining registrations for pesticide products containing ingredients identified as nanosilver or nanosilver composite structures (jointly referred to as “nanosilver”), and several companies have submitted applications to register pesticides containing nanosilver. In addition, EPA now has information suggesting that there are other pesticide products currently registered and in the marketplace that contain nanosilver as an active ingredient.

In order for EPA to fulfill its responsibilities to regulate pesticides under FIFRA, it needs to determine whether pesticidal products meet the statutory standards for registration. As summarized previously, EPA believes that what intentionally produced nanoscale materials are in a pesticide product, whether as an active or inert ingredient, is relevant to that determination. Accordingly, EPA is considering how to collect information not only about what nanoscale materials are in pesticide products, but also other information that may be relevant to the assessment of the potential of such pesticide products to cause unreasonable adverse effects on the environment. Such information may be important for EPA to determine whether EPA should continue the registration of a product, or amend, as appropriate, the terms and conditions of registration of a product. EPA is therefore soliciting public comment on two possible approaches for obtaining this information, as discussed in this document.

In light of the foregoing and in consideration of the potential for nanoscale material to cause different effects and to behave differently in the environment and within organisms from larger particles of the same substance, as well as from nanoscale materials with different characteristics (see Unit III.B.), EPA believes that any of the following types of information are relevant to assessing the potential of a pesticide to cause unreasonable adverse effects on the environment:

• Any information concerning what nanoscale materials are present in pesticides, whether as an active ingredient or as an inert ingredient;

• For any pesticide product that contains nanoscale material, whether active or inert, any existing information that characterizes the size and size distribution of the nanoscale material as measured in nanometers;

• For any pesticide product that contains nanoscale materials, whether active or inert, any existing information that describes the manufacturing process used to produce the nanoscale material in whatever size range it is produced;

• For any pesticide product that contains nanoscale materials, whether active or inert, and that also is or will be used for an end-use formulation that contain(s) a composite ( e.g., the active ingredient is a matrix complex comprised of the nanoscale material(s) in combination with a carrier, such as silica or sulfur), any existing information that characterizes the size and size distribution of the composite; and

• For any pesticide product that contains nanoscale materials, whether active or inert, any existing information that shows adverse effects at any level of exposure to the nanoscale material on humans or nontarget species, and/or that shows the levels or nature ( e.g. routes, frequency, or life stage) of potential human and environmental exposure.

Importantly, the foregoing is not intended to be an exclusive list. To the extent that a registrant has a pesticide product that contains a nanoscale material, and in addition has any other existing information not captured in the previous list that pertains to, concerns, or otherwise relates to the nanoscale material and has the potential to raise questions about the continued registration of a product or the appropriate terms and conditions of a product registration, EPA is also considering whether this too should be submitted to the Agency.

EPA will review information submitted concerning what nanoscale materials are present, including any existing information not previously provided to the Agency on size and size distribution, manufacturing process, and adverse effects. EPA will use this and product use information to determine if it raises any issues, not previously considered, regarding the product's potential to cause unreasonable adverse effects on the environment. In some cases, EPA may determine that additional information is needed to assess such potential; in this case, additional data may be required including data on physical and chemical properties, rate of nanoscale material release, and acute, subchronic, and chronic toxicity to human and ecological receptors.

As discussed in Units III. and IV. of this document, EPA believes that information about what nanoscale materials are in pesticide products is important to its assessment of whether pesticides meet the statutory standard for registration. EPA may require such information under either FIFRA section 6(a)(2) or section 3(c)(2)(B). The Agency believes that announcing the applicability of FIFRA section 6(a)(2) to this type of information would be the most efficient and expedient administrative approach to obtaining existing information about nanoscale materials in pesticides, in which case any registrants with this type of information would be required to report it to EPA. The Agency is considering, however, an alternative approach under which it would issue DCIs under FIFRA section 3(c)(2)(B) to obtain this information, in which case registrants that received the DCI would be required to respond. This unit of the document discusses the two possible approaches and related procedures for obtaining information concerning nanoscale materials in pesticides.

As mentioned previously, FIFRA section 6(a)(2) and implementing regulations in 40 CFR part 159 require pesticide registrants to report certain information if that information:

1. Is additional;

2. Is factual; and

3. Regards unreasonable adverse effects on the environment of the pesticide.

Per 40 CFR 159.195, this includes information that, if correct, a registrant knows, or reasonably should know, would be regarded by EPA, either alone or in conjunction with other information about the pesticide, as raising concerns about the continued registration of a product or about the appropriate terms and conditions of registration of a product.

Announcing the applicability of FIFRA section 6(a)(2) to information about nanoscale materials in pesticides would not mean that EPA is expanding its interpretation of FIFRA section 6(a)(2) or changing its regulations. Rather, consistent with EPA's section 6(a)(2) regulations, EPA would be merely identifying a set of information that adds to the subset of reportable section 6(a)(2) data explicitly identified at present under the section 6(a)(2) regulations.

Further, the Agency notes that the identification of information as reportable under FIFRA section 6(a)(2) does not mean that any particular pesticide or group of pesticides, to which such information pertains, poses a risk. Rather, the requirement merely indicates that EPA has determined that a particular type of information is relevant to, and may improve the Agency's ability to assess, whether the pesticide would cause an unreasonable adverse environmental effect.

As part of this approach, EPA would also require that any such information be reported in connection with any application to register a pesticide product containing any nanoscale material (40 CFR 152.50(f)(3)). As with the reporting obligation under FIFRA section 6(a)(2), EPA would consider the failure to provide these types of information with an application for a product containing nanoscale material to be a violation of FIFRA sections 12(a)(2)(B)(ii) and 12(a)(2)(N).

Agency regulations implementing FIFRA section 6(a)(2) provide that a registrant must submit information to EPA that is reportable under section 6(a)(2) no later than the 30th calendar day after the registrant first possesses or becomes aware of the information (40 CFR 159.155). In addition, a registrant is required to submit to EPA any section 6(a)(2) information not explicitly covered under the section 6(a)(2) regulations if EPA has informed the registrant that such additional information has the potential to raise questions about the continued registration of a product or the appropriate terms and conditions of registration of a product (40 CFR 159.195).

After learning that EPA was considering relying on FIFRA 6(a)(2) to require reporting, some stakeholders raised questions about the use of FIFRA section 6(a)(2) to obtain this information. Even though, as stated above, EPA is not making a judgment that the presence of any particular nanoscale material poses a risk, it has been argued that use of the “adverse effects” reporting authority in FIFRA section 6(a)(2) could create a “stigma” for the nanotechnology industry.

EPA does not believe that using FIFRA section 6(a)(2) to gather information on the presence of nanoscale materials in pesticide products would create a stigma for the nanotechnology industry. EPA's longstanding interpretation of section 6(a)(2) is that it is not limited to requiring reporting only of actual “adverse effects” of pesticides, and its use does not imply that “adverse effects” actually have occurred, or even could occur, in connection with the pesticide or pesticide ingredient on which the information is being obtained. FIFRA section 6(a)(2) requires reporting of “additional factual information regarding unreasonable adverse effects on the environment,” where “unreasonable adverse effects on the environment” is specifically defined as a risk/benefit standard. EPA's implementing regulations require reporting of a wide range of data, which—like information on nanoscale materials—are relevant to EPA's risk/benefit evaluations, but which do not indicate the pesticide causes any adverse effects. Any suggestion that this information gathering proposal implied an EPA position on the adverse effects of pesticides containing nanoscale materials would be a misinterpretation of EPA's intent.

It is further EPA's position that merely filing an additional report under FIFRA section 6(a)(2) does not stigmatize pesticides and would not stigmatize any nanomaterials in pesticides, since filing such reports is quite common. On average, EPA receives 200 studies and 56,000 incident reports per year under this authority. In fact, over the last 10 years, pesticide registrants have filed section 6(a)(2) reports on more than two-thirds of all pesticide active ingredients.

Use of FIFRA section 6(a)(2) also would have only a minimal overall administrative burden for both EPA and industry. Under section 6(a)(2), only registrants who know that their products contain nanoscale materials would be required to report to EPA. Further, they would be required to report only the information they know about. Section 6(a)(2) does not require a registrant to generate new data or to seek out additional information. Further, registrants and applicants whose products do not contain nanoscale materials (or who do not know that their products contain nanoscale materials) would have no reporting obligation under FIFRA section 6(a)(2). Under this approach, EPA would be required to keep track of each response received under 6(a)(2), but would not otherwise need to prepare or track individual requests for the information.

As an alternative to relying on FIFRA section 6(a)(2) to obtain information concerning nanoscale materials in pesticides, EPA is also considering issuing DCIs under FIFRA section 3(c)(2)(B). The Agency has authority under FIFRA section 3(c)(2)(B) to issue a DCI notice to a pesticide registrant directing them to provide data “required to maintain in effect an existing registration of a pesticide * * *” The DCI notice is addressed to an individual registrant, specifically identifies the information or data that the registrant must provide, prescribes an initial response deadline of 90 days, and, if data are to be generated, it may prescribe a timeframe for generating and providing that data. Under FIFRA, EPA can suspend the registration of a pesticide if the registrant fails to respond to a DCI.

As part of this alternate approach, EPA would also need to require the inclusion of this information with any application for registration of a pesticide product that contains a nanoscale material. EPA is reviewing whether this could be done under existing regulations or whether EPA would need to amend existing regulations to clarify that this information is required with any application for registration. As with the reporting obligation under FIFRA section 6(a)(2), EPA would consider the failure to provide these types of information with an application for a product containing nanoscale material to be a violation of FIFRA sections 12(a)(2)(B)(ii) and 12(a)(2)(N).

Since EPA's goal is to identify what nanoscale materials are contained in products (and the products that contain them) and to gather existing information not previously provided to assess their safety, the DCI would need to require the kinds of information specified in Unit IV. of this document. Because such a request is not consistent with the Re-registration or Registration Review programs, the Agency would use the Enforcement and Unanticipated Circumstances category available in the currently approved Information Collection Request (73 FR 55072, September 24, 2008) (FRL-8719-3).

Unless a registrant has already disclosed the presence of nanoscale material in all of its products, there currently is no way to identify with certainty what nanoscale materials are in products (and the products that contain them). Therefore, in order to identify what nanoscale materials are in products, EPA could initially send an individual Enforcement and Unanticipated Circumstances DCI order to each of the 1,716 currently registered pesticide producers. Under this approach each of these pesticide registrants would then be required to respond within 90 days by either providing the requested information about the nanoscale materials in their product(s) or certifying that their product(s) do not contain nanoscale materials. In addition to keeping track of each response like under FIFRA section 6(a)(2), the approach under FIFRA section 3(c)(2)(B) could require EPA to also prepare and track the issuance of individual DCIs for each pesticide registrant, as well as determine and take any necessary enforcement actions for non-responders. EPA notes that only pesticide registrants receive DCIs; EPA would need to employ additional administrative procedures to ensure that applicants also provided such information.

A variation on this approach would be for EPA to craft a DCI that would be more targeted and place less burden on industry and the Agency, possibly by not requiring a response from recipients of the DCI who do not have (or who do not know that they have) nanoscale material in their registered pesticide products. The Agency has not used such an approach with any DCI in the past; however, and a number of issues, including enforcement, would need to be addressed if it were to seek to do so here. EPA could also focus its initial data gathering on certain classes of pesticides that might be most likely to contain a nanoscale material that EPA would be interested in knowing about. EPA is interested in receiving comments on these variations.

It is useful to note that while FIFRA section 6(a)(2) can be used to obtain existing information, the DCI approach under FIFRA section 3(c)(2)(B) allows the Agency to request that data be generated. If EPA uses FIFRA section 6(a)(2) authority and the Agency learns, for instance, the identity of a nanoscale material present in a product, and subsequently determines that sufficient data are not available to support the continued registration of the pesticide, EPA could then use the DCI approach under FIFRA section 3(c)(2)(B) to gather such information. EPA must use the DCI approach if EPA intends to require a registrant to provide information which the registrant does not already possess.

It is anticipated that some registrants will request that EPA review information to determine if their product contains nanoscale materials. To the extent that the description of nanoscale material to a particular product or ingredient is unclear, EPA will review information concerning the composition and manufacturing process of the pesticide product and, based on that information, the Agency will determine whether the product does (or does not) contain nanoscale material.

It has been suggested that the use of a 3(c)(2)(B) approach would result in submission of information that only reflected the composition of registrants' products at the time of their responses, but that EPA would need periodically to issue DCIs to ensure that registrants did not alter the composition of the products to add nanoscale materials after submitting their responses. EPA is interested in receiving comments on options whereby it can ensure registrants report what nanoscale materials are in products, regardless of when they are added to the pesticide.

Under either the 6(a)(2) or the 3(c)(2)(B) approach, DCIs targeted to individual pesticide products that contain specific nanoscale materials would likely be used in the future to collect more specific information or data about particular products. EPA would consider doing so on a case-by-case basis and would tailor any request for information accordingly.

Some stakeholders have suggested, as an alternative to relying on either FIFRA section 6(a)(2) or 3(c)(2)(B) DCIs to obtain information concerning nanoscale materials in pesticides, that EPA instead promulgate a regulation amending the data requirements in 40 CFR parts 158 and 161. The Agency could amend the data requirements to include disclosure of what nanoscale materials are present as part of the pesticide registration process. However, completing this action would not provide information on currently registered pesticide products.

The Agency sees such proposed rulemaking with a broader scope in that it would address not only the basic information such as identifying what nanoscale materials are in products, but also many other types of data required for making safety evaluations. The Agency is currently making data need decisions on a case-by-case basis, and EPA is trying to tailor data requirements to the particular characteristics of each product. The Agency does not yet have the knowledge base typically gained through the registration process to support the development of specific data requirements that would be imposed broadly for the registration of pesticides containing nanoscale materials across all the application and use scenarios, as required for such a rulemaking.

Although it could take considerable time to finalize and implement a rule establishing standard data requirements for pesticides containing nanoscale materials, and the Agency thus believes that this approach by itself would not generate information on nanoscale ingredients in pesticides in a timely manner, EPA also seeks comment on this approach.

As discussed in more detail earlier in this document, under FIFRA, all pesticides must meet stringent statutory and regulatory standards before they are registered by the Agency and allowed to be marketed and sold. Pesticides containing nanoscale materials, whether as active or inert ingredients, must meet the same safety standards as other pesticides. Because of the large and increasing body of data described in Unit III.B. of this document demonstrating that size can alter the manner in which materials behave and, in turn, the potential risk to human health and the environment associated with such materials, EPA proposes to apply an initial presumption that active and inert ingredients, which are the nanoscale versions of non-nanoscale active and inert ingredients already present in registered pesticide products, are potentially different from those conventionally sized counterparts. Because the size, shape, and other characteristics of nanoscale ingredients are likely to vary widely, EPA also proposes to apply an initial presumption that nanoscale active and inert ingredients are potentially different even from other, already-registered nanoscale versions of the same ingredients. As explained later in this document, however, applicants can overcome this presumption on a case-by-case basis.

Historically, EPA has evaluated an application for registration of a pesticide product that claims to have the same composition and uses as a currently registered pesticide—a so-called “me-too application”—under either the “conditional” registration or “unconditional” registration authorities in FIFRA section 3(c)(7) and section 3(c)(5), respectively. In making the statutory determinations under section 3(c)(7)(A)—whether the applicant's product is identical or substantially similar to a currently registered pesticide or differs only in ways that would not significantly increase the risk of unreasonable adverse effects on the environment, and that approving the registration in the manner proposed would not significantly increase the risk of any unreasonable adverse effect on the environment—EPA has focused on whether the use patterns of the products are identical or similar and whether the ingredients present in the products have the same chemical structure and are present in about the same percentages. Until recently, EPA generally has not focused on the size of an ingredient as an attribute relevant to making the determinations under section 3(c)(7)(A).

As noted previously, however, once the size of an ingredient is reduced below approximately 100 nm, a substance can exhibit different properties, and therefore it may also have different potential environmental health and safety properties. Accordingly, for a product containing an ingredient that is a nanoscale version of a conventionally sized active or inert ingredient contained in an already-registered product, EPA may require additional data in order to determine that the nanoscale material differs only in ways that do not significantly increase the risk of unreasonable adverse effects on the environment and that approving the registration in the manner proposed would not significantly increase the risk of any unreasonable adverse effect on the environment, and/or require different terms and conditions for the registration. EPA is thus proposing that it not make the requisite findings absent specific information on the nanoscale material included in a pesticide product when the application relies on a comparison to a currently registered pesticide product containing either a non-nanoscale version of the same ingredient or another nanoscale version of the ingredient that has different characteristics. Under this approach, the Agency would follow the same thinking in making the statutorily required determinations under FIFRA section 3(c)(7)(B) and 3(c)(7)(C), as well as FIFRA section 3(c)(5).

For purposes of registration under FIFRA section 3(c)(5) or 3(c)(7), therefore, EPA would initially classify any application for registration of a pesticide product containing an active or inert ingredient that is a nanoscale material as an application for a “new” active or inert ingredient, even when another registered pesticide product contains a non-nanoscale form of the ingredient or a nanoscale form of the ingredient with different size dimensions or other properties. This initial presumption, however, could be rebutted on a case-by-case basis through the submission of, among other possibilities, bridging data or other information demonstrating to EPA's satisfaction that the nanoscale material's properties, which are relevant to assessing the potential risks to human health and the environment, are substantially similar to the properties of the already-registered non-nanoscale or already-registered nanoscale form of the material, or that the nanoscale material differs only in ways that do not significantly increase the risk of unreasonable adverse effects on the environment, and that approving the registration in the manner proposed would not significantly increase the risk of any unreasonable adverse effect on the environment.

If an applicant could make this showing to EPA's satisfaction, then the application would be processed as a “me-too” application within the timeframes prescribed for such applications. However, if an applicant could not make this showing to EPA's satisfaction, then EPA would process such products as new active ingredients or new inert ingredients and would complete its review within the timeframes prescribed for such applications. In those circumstances, the Agency would likely require the applicant to provide the types of data typically required for an assessment of the potential hazards and exposure to a new active or inert ingredient. Under this proposed policy, it would also follow that if a registrant wished to change the composition of its product to include a nanoscale version of a material that EPA had previously approved in non-nanoscale form, the registrant would need to notify EPA and obtain EPA approval before making such a change in the composition of its product. However, as noted earlier, the registration status of a product would not change merely as a result of providing information to EPA about the presence of a previously-unreported nanoscale material. If EPA made an affirmative finding that a change in status or conditions of use was necessary, EPA would notify the registrant in accordance with applicable regulations and procedures.

This document seeks comments on how the Agency could use FIFRA section 6(a)(2) or FIFRA section 3(c)(2)(B) to gain information on what nanoscale materials are in pesticides. Given that the Agency is seeking comment before determining its approach to obtaining information on what nanoscale materials are in pesticides, there are no binding requirements in this document.

Once this document is finalized, the Agency's policy for determining whether a nanoscale material is a new active or inert ingredient for purposes of both FIFRA and PRIA would be intended only as guidance to EPA personnel and decision-makers and to pesticide applicants. While the requirements in the statute and Agency regulations are binding on EPA and the applicants, the proposed policy described in this document would not be binding on EPA personnel, pesticide applicants, or the public. Accordingly, EPA may depart from the policy proposed herein if and when circumstances warrant. Likewise, pesticide applicants may assert that the proposed policy is not applicable to a specific pesticide or situation in which EPA may be expected to apply it.

The Agency is seeking public comment on several questions, including whether it should use the FIFRA section 6(a)(2) reporting obligation to obtain information on what nanoscale materials are in pesticide products or use FIFRA section 3(c)(2)(B) as described in this document to obtain such information.

With respect to the scope of reportable information, EPA specifically invites comments on the following issues:

1. In view of the Agency's goal of identifying what nanoscale materials are in products so that EPA can determine whether it needs additional data to evaluate the products' safety under FIFRA, should EPA change the description of a “nanoscale material”? For example, should the size range remain “between approximately 1 and 100 nm in one dimension”? Are there other characteristics that EPA should consider, e.g., morphology, including shape and crystal structure; surface chemistry and reactivity; specific surface area, charge; solubility; conductive, magnetic, and optical properties?

2. Should the reporting requirement apply only to nanoscale material that is “intentionally produced to have at least one dimension that measures between approximately 1 and 100 nanometers,” or should it also apply to naturally occurring materials? Why?

3. Is the meaning of “intentionally produced” sufficiently clear? If not, in what circumstances would the term be unclear and how might it be clarified? Would offering a consultation procedure—by which a registrant or applicant describes to EPA the production process that results in the presence of a material in the nanoscale size range, and EPA responds with a determination regarding whether reporting is required—be an acceptable approach to providing clarity?

4. Should the reporting requirement apply to ingredients in pesticides that contain any amount of a nanoscale material, or should the requirement apply only if an ingredient contains more than a specified percentage ( e.g., 10%) of nanoscale material? If the latter, what should the specified percentage be and why?

5. How should the reporting requirement apply to a pesticide manufacturer who purchases ingredients that may contain nanoscale material?

6. Are there ways in which the description of “nanoscale materials” can be refined and clarified, including ways in which agglomeration and aggregation could be considered as well as suggestions for ways in which more subjective criteria, such as “unique or novel properties” can be incorporated into the screening criteria?

7. Is EPA's description of “nanoscale material” inconsistent with other definitions of nanoscale material or similar terms? If so, please comment on whether such differences create any regulatory issues. In particular, does the focus on “intentionally produced” materials create any such inconsistency with other definitions of nanoscale materials or similar terms?

8. If a pesticide is identified as containing a particular nanoscale material, what would be the most useful next steps to inform EPA's understanding of potential risks associated with the pesticide? Are there tests that could provide useful information toward an understanding of risk that would be common to all nanoscale materials, or should the data requirements necessarily be compound- and situation-specific? How should bioavailability be considered in determining testing requirements ( e.g., are nano-particles respirable or bound to other components)?

With respect to the proposed approaches, EPA is seeking comment on how to implement them to ensure efficient, effective, and timely review of applications. EPA specifically invites comments on the following issues:

1. Is there a way to determine, in advance of receiving an application for registration of a product containing a nanoscale material, whether a particular kind of nanoscale material has properties that, for purposes of risk assessment, are essentially the same as larger sized materials of the same substance? If so, how would such determinations be made and on what would they be based?

2. What kinds of information should EPA accept as demonstrating that a pesticide product containing a nanoscale ingredient is identical or substantially similar to a currently registered pesticide or differs only in ways that would not significantly increase the risk of unreasonable adverse effects on the environment, and that approving the registration in the manner proposed would not significantly increase the risk of any unreasonable adverse effect on the environment?

3. Can you suggest any alternative(s) to the proposed approaches that would be equally or even more effective in addressing the status of nanoscale materials as new active or inert ingredients for purposes of both FIFRA and PRIA, keeping in mind the data showing that size, especially when reduced below approximately 100 nm, may alter the manner in which materials behave and, in turn, the potential risk to human health and the environment associated with such materials?

With respect to the potential alternative ways of obtaining the needed information on what nanoscale materials are in pesticide products, EPA specifically invites comments on the following issues:

1. Has EPA appropriately characterized in this document the current scientific understanding of the potential risks of nanoscale materials? If not, please comment on how to characterize the potential risks of nanoscale materials. How would the perception of the risks of nanoscale materials differ depending on the approach used by EPA to require needed data on nanoscale materials in pesticides? How could EPA lessen the possibility that issuance of a final requirement to report what nanoscale materials are in pesticides will result in a public misunderstanding of the potential risks of nanotechnology more generally?

2. Do commenters believe that identification of the nanoscale materials in pesticide products is relevant to EPA's statutory determination regarding the potential for unreasonable adverse effects on the environment? Please provide the scientific or legal basis for your view.

3. Has EPA characterized the alternative approaches with respect to which they would: (a) result in a misunderstanding of the potential risks posed by nanoscale materials; (b) result in the timely submission of needed information; and (c) impose burdens on pesticide companies, those whose products do, and do not, contain nanoscale materials? If not, please comment on those issues.

4. If EPA uses FIFRA section 6(a)(2) to obtain the needed information on nanoscale materials in pesticides, how could the Agency ensure that its action is not mischaracterized or misunderstood as a determination that the mere fact that a pesticide contains nanoscale materials causes unreasonable adverse environmental effects?

5. If EPA were to use DCIs to obtain the needed information on nanoscale materials in pesticides, how could EPA reduce both the burdens on registrants and on EPA, as well as the time required to complete such a process? For example, is it possible to reduce the burdens on registrants by targeting only certain types of products? If so, how would EPA determine which products should receive DCIs?

6. What are the advantages and disadvantages of requesting information on nanoscale materials specifically versus requesting information on size distribution generally? (Note that either type of information could be collected under either the 6(a)(2) or the 3(c)(2)(B) approach, except that 6(a)(2) cannot be used to require the production of new information that does not already exist, while a collection under 3(c)(2)(B) must be directed to an individual registrant and requires a response.) Is identifying what nanoscale materials are in products a useful first step, or should EPA move towards immediate collection of more specific information, such as particle size distribution, on products that might contain nanoscale materials? Are there other physical and/or chemical properties that might be equally or more important for assessing the potential of a pesticide to cause unreasonable adverse effects on the environment ( e.g., morphology, including shape and crystal structure; surface chemistry and reactivity; specific surface area, charge; solubility; conductive, magnetic, and optical properties)? Should information on these properties be separately requested? What would be the value and burden of obtaining such information?

1. If EPA were to use rulemaking to establish data requirements for pesticides containing nanoscale materials, what types of information should EPA use to determine appropriate data requirements? What types of studies should EPA require to evaluate a nanoscale material?

2. When choosing an approach for obtaining needed data, how should EPA weigh considerations relating to the need to update its safety evaluations of currently marketed pesticides in a timely manner, the goal of ensuring marketplace equity, and the interest in minimizing the burdens on regulated entities?

As indicated under ADDRESSES , a docket has been established for this document under docket ID number EPA-HQ-OPP-2010-0197. The following is a listing of the documents that are specifically referenced in this document. The docket includes these documents and other information considered by EPA, including documents that are referenced within the documents that are included in the docket, even if the referenced document is not physically located in the docket. For assistance in locating these other documents, please consult the technical contact person listed under FOR FURTHER INFORMATION CONTACT .

EPA submitted this document to the Office of Management and Budget (OMB) for review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Any changes made in response to OMB recommendations have been documented in the docket for this action as required by section 6(a)(3)(E) of the Executive Order.

The information collection requirements associated with reporting under FIFRA section 6(a)(2) as prescribed in 40 CFR part 159, subpart D are approved under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. The approval is identified under OMB Control No. 2070-0039 and EPA ICR No. 1204. The information collection requirements associated with DCIs is approved under OMB Control No. 2070-0174 and identified by EPA ICR No. 2288. If EPA were to finalize a policy that required additional reporting of information not currently collected, or that substantively changed the burden for such reporting (for example if it resulted in a larger number of such reports than covered in current burden estimates), EPA would submit a request for revised PRA approval to OMB.

The various other statutory and Executive Order review requirements that apply to a regulatory action do not apply to this action because this document is not a regulatory action and does not otherwise impose new requirements. As indicated previously, this document requests comment on several approaches for applying existing requirements in order to obtain information on nanoscale materials in pesticide products and presents the Agency's proposed policy for determining whether a nanoscale material is a new active or inert ingredient for purposes of both FIFRA and PRIA.