Federal Register / Vol. 62, No. 34 / Thursday, February 20, 1997 / Rules and Regulations 7675

1Commission Regulation 1.35(a–1)(1) states that:

Each futures commission merchant and each

introducing broker receiving a customer’s or option

customer’s order shall immediately upon receipt

thereof prepare a written record of such order,

including the account identification and order

number, and shall record thereon, by time-stamp or

other timing device, the date and time to the nearest

minute, the order is received, and in addition, for

[an] option customer’s order, the time, to the

nearest minute, the order is transmitted for

execution.

2Commission Regulation 1.35(a–1)(2)(i) states

that:

Each member of a contract market who on the

floor of such contract market receives a customer’s

or option customer’s order which in not in the form

of a written record including the account

identification, order number, and the date and time,

to the nearest minute, such order was transmitted

or received on the floor of such contract market,

shall immediately upon receipt thereof prepare a

written record of such order in non-erasable ink,

including the account identification and order

number and shall record thereon, by time-stamp or

other timing device, the date and time, to the

nearest minute, the order is received.

3Commission Regulation 1.35(a–1)(4) states that:

Each member of a contract market reporting the

execution from the floor of the contract market of

a customer’s or option customer’s order or the order

of another member of such contract market received

in accordance with paragraphs (a–1)(2)(i) * * * of

this section, shall record on a written record of such

order, including the account identification and

order number, by time-stamp or other timing

device, the date and time to the nearest minute such

report of execution is made. Each member of a

contract market shall submit the written records of

customer orders or orders from other contract

market members to contract market personnel or to

the clearing member responsible for the collection

of orders prepared pursuant to this paragraph as

required by contract market rules adopted in

accordance with paragraph (j)(1) of this section. The

execution price and other information reported on

such order tickets must be written in non-erasable

ink.

4Commission Regulation 1.35(d) states, among

other things, that:

Each member of a contract market who, in the

place provided by the contract market for the

meeting of persons similarly engaged, executes

purchases or sales of any commodity for future

delivery or commodity option on or subject to the

rules of such contract market, shall prepare

regularly and promptly a trading card or other

record showing such purchases and sales. Such

trading card or record shall show the member’s

name, name of the clearing member, transaction

date, time, quantity, and, as applicable, underlying

commodity, contract for future delivery or physical,

price or premium, delivery month or expiration

date, whether the transaction involved a put or a

call and strike price. Such trading cards or other

record shall also clearly identify the opposite floor

broker or floor trader with whom the transaction

was executed, and the opposite clearing member.

5Section 5a(b)(3) of the Futures Trading Practices

Act of 1992 (‘‘FTPA’’) sets forth various heightened

audit trail requirements which are subject to a

‘‘practicability’’ standard.

potential adverse noise impact from

aircraft-based sightseeing overflights.

EFFECTIVE DATE: February 11, 1997.

FOR FURTHER INFORMATION CONTACT:

Neil Saunders (202–267–8783).

Correction of Publication

In the rule document (FR Doc. 97–

435) on page 1192 in the issue of

Wednesday, January 8, 1997,

Amendment numbers were inserted

incorrectly in the docket line of the

heading. Please make the following

corrections: On page 1192, column 1, in

the heading, the docket line in brackets

is corrected to read as set forth above.

Issued in Washington, DC on February 11,

1997.

Donald P. Byrne,

Assistant Chief Counsel.

[FR Doc. 97–4210 Filed 2–19–97; 8:45 am]

BILLING CODE 4910–13–M

COMMODITY FUTURES TRADING

COMMISSION

17 CFR Part 1

Alternative Method of Compliance With

the Written Record Requirements

AGENCY: Commodity Futures Trading

Commission.

ACTION: Advisory; alternative method of

compliance.

SUMMARY: The Commodity Futures

Trading Commission (‘‘Commission’’) is

issuing advice concerning compliance

with the ‘‘written’’ record requirements

of Commission Regulation 1.35 (17 CFR

1.35) for customer orders which are

prepared and transmitted to and

reported from exchange trading pits by

electronic order-routing systems and for

customer orders prepared by electronic

off-floor order management systems

(referred to collectively as ‘‘electronic

order-routing systems’’). The ‘‘written’’

record requirements of Commission

Regulation 1.35(a–1)(1), (a–1)(2)(i), (a–

1)(4), and/or (d) will be deemed

satisfied, subject to the terms and

conditions set forth in this Advisory, to

the extent that such a system generates

electronic rather than ‘‘written’’ records.

The electronic record of a customer

order generated through an electronic

order-routing system must include any

modification made to the order,

including any change or correction, as

well as the time the modification is

recorded in the system. The system also

must maintain an accurate record of

when and by whom records are

accessed or modified. In addition, such

a system must capture all order-related

times required under these Commission

Regulation 1.35 subsections to the

highest level of precision achievable by

the operating system. In this regard,

such a captured time must be accurate

at least to the second. The time captured

must not use a clock that can be

modified by the person entering the

order. All electronic records of customer

orders created by an electronic orderrouting system must be maintained in

accordance with the record retention

requirements of Commission Regulation

1.31.

FOR FURTHER INFORMATION CONTACT:

Kimberly A. Browning, Attorney/

Advisor, Division of Trading and

Markets, Commodity Futures Trading

Commission, Three Lafayette Centre,

1155 21st Street, N.W., Washington,

D.C. 20581. Telephone: (202) 418–5490.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Commission is hereby issuing

guidance concerning alternative

compliance with the ‘‘written’’ record

requirements of certain Commission

Regulation 1.35 subsections which call

for the preparation of ‘‘written’’ records

of customer orders. Specifically,

Regulation 1.35(a–1)(1) requires that a

futures commission merchant (‘‘FCM’’)

and introducing broker (‘‘IB’’),

immediately upon receiving a

customer’s or option customer’s order,

prepare a written record of such order,

including the account identification,

order number, and a timestamp

indicating the date and time, to the

nearest minute, the order is received.1

Similarly, Regulation 1.35(a–1)(2)(i)

provides that each member of a contract

market who receives a customer order

on an exchange floor that is not in the

form of a written record immediately

upon receipt of such order prepare and

timestamp a written record of the

order.2 For all such orders, Regulation

1.35(a–1)(4) requires an exit timestamp

indicating the date and time of the

report of execution.3 Regulation 1.35(d)

provides that a contract market member

who executes a trade must prepare a

trading card or other record showing the

fill information for the customer

purchase or sale order.4

The Commission is issuing this

Advisory to facilitate further the

implementation and use of electronic

order-routing systems, including both

proprietary and exchange systems, in

U.S. futures markets. This action

constitutes the latest in a series of steps

taken by the Commission to encourage

the futures industry to realize the

business and regulatory benefits of such

systems. Recently, to advance the public

dialogue on improving the efficiency of

exchange and proprietary order-routing

systems and to discuss potential

practicability issues related to audit trail

standards,5 the Commission convened a

public Roundtable in Chicago, Illinois

on October 16, 1996. At that forum,

market users, financial market experts,
7676 Federal Register / Vol. 62, No. 34 / Thursday, February 20, 1997 / Rules and Regulations

6The Commission shortly will be issuing a public

summary of the Roundtable proceedings.

7See the Commission’s ‘‘Report on Audit Trail

Status and Re-Test’’ dated August 12, 1996 at p. 42.

8See the Commission’s November 1994 ‘‘Report

to Congress on Futures Exchange Audit Trails’’ at

p. 62.

9See the Commission’s May 10, 1996 ‘‘Market

Automation Briefings-Commission Summary’’ at p.

3.

10On July 8, 1996, the Division issued a letter to

CME that permitted the CME to allow one of its

clearing member firms, Timber Hill, LLC (‘‘Timber

Hill’’) to use, on a permanent basis, a handheld

trading device and system (‘‘Timber Hill System’’)

to receive customer orders in and report executions

from the equity quadrant of the CME, described

infra. By letter dated August 25, 1995, the Division

originally permitted the CME to use the Timber Hill

System for a 90-day pilot program. Extensions of

that pilot program were subsequently granted by the

Division.

11On June 14, 1996, the Division issued a letter

that allowed a six-month pilot program to be

implemented at CME under which certain CME

member firms and floor broker groups are allowed

to route customer orders for the front month of the

CME’s Eurodollar futures contract through the

CME’s electronic order-routing system, the ‘‘Trade

Order Processing System’’ (‘‘TOPS’’), to the CME’s

order receipt system, the ‘‘Universal Broker

Station’’ (‘‘CUBS’’) (‘‘TOPS–CUBS Program’’),

described infra. By letter dated December 13, 1996,

Division staff permitted CME to extend the TOPS–

CUBS Program to June 13, 1997.

12On July 21, 1994, the Division issued a letter

to Goldman, Sachs & Co. (‘‘Goldman Sachs’’)

permitting it to implement its automated order

preparation and record keeping system, Automated

Order Routing and Trade Accounting (‘‘AORTA’’).

The AORTA system is described infra.

On September 12, 1996, the Division issued a

similar letter to Morgan Stanley & Co. (‘‘Morgan

Stanley’’) permitting it to implement its automated

Order Management System (‘‘OMS’’), described

infra.

13 In summary, under the Timber Hill System, a

customer enters his order(s) electronically through

a customer workstation(s) located on his premises.

That order then is transmitted via the Timber Hill

Network to a basestation located on the CME

trading floor in a booth in proximity to the CME’s

Standard & Poors 500 and NASDAQ 100 futures

and options pits. Upon receipt of the order by the

floor basestation, the basestation broadcasts it to a

wireless handheld device held by a Timber Hill

floor broker located in the trading pit for execution.

Upon execution (partial or complete), the order’s

fill information, as input into the handheld device

by the floor broker, is transmitted from the

handheld unit back to the basestation. The

basestation then transmits the fill confirmation

information back to the customer at his workstation

via the Timber Hill System.

14 In summary, TOPS is an electronic order entry,

routing and fill reporting system. Under the TOPS–

CUBS Program, orders for the Eurodollar futures

contract are transmitted through TOPS, which

includes terminals located off the trading floor, to

CUBS computer terminals and associated software

designed for use by a broker and/or a broker’s clerk

while at or in the trading pit. The CUBS system is

a wired broker workstation that sits on a pedestal

in the pit. It receives orders routed by TOPS and

performs electronic order deck management.

15The Timber Hill System basestation maintains

an on-line file of all customer orders transmitted

through it, including order-related timestamps.

CME receives this file from the basestation via a

serial port feed (cable) on a real-time basis. Upon

receipt of the basestation data, CME maintains it in

machine-readable form and will keep it for the

required five-year time period as provided under

Commission Regulation 1.31, described infra.

Timber Hill also provides data for all customer

orders executed through the Timber Hill system to

the CME’s clearing system via the on-line system

which all CME member firms use to submit trade

data to the CME’s clearing system, the TREX

Record. In addition, customer trade data are stored

on the hard drives of customer workstations. On a

daily basis, Timber Hill backs up to magnetic tape

all customer trade data generated through the

basestation, the main/’’host’’ computer and the

customer workstations. Within one week of being

generated, such data are placed on an optical

disc(s). Twice a month, duplicate optical disks are

deposited in a vault located off-site.

16Customer order data generated by trading

activity occurring under the TOPS–CUBS Program

are stored in two separate databases, a TOPS

database and a CUBS database. This storage is

conducted in accordance with the CME’s routine

security and disaster prevention procedures. As a

preliminary matter, data in both databases is

‘‘backed-up’’ every evening onto a series of disk

drives on the CME’s mainframe computer, where it

is stored for 30 days. Subsequently, CME stores the

data from both databases in its archives on cartridge

tape in a secure location.

17Commission Regulation 1.35(a) requires, among

other things that each FCM, IB and member of a

contract market must ‘‘keep full, complete, and

systematic records, together with all pertinent data

and memoranda, of all transactions relating to its

business dealing in commodity futures, commodity

options, and cash commodities.’’ Regulation 1.35(a)

further provides that such records, which include

all orders (filled, unfilled, or cancelled) and trading

cards are to be maintained in accordance with the

requirements of Regulation 1.31.

18Commission Regulation 1.31 requires, among

other things, that:

All books and records required to be kept by the

[Commodity Exchange] Act or [Commission]

exchange officials and academics met to

discuss the trade automation issues

currently before the futures industry.

Discussion at the Roundtable

demonstrated the significance of the

development and implementation of

exchange and proprietary electronic

order-routing systems to the continuing

competitiveness of the U.S. exchanges

and their member firms.6 Previously, in

February and March 1996, the

Commission received automation

briefings by the Chicago Mercantile

Exchange (‘‘CME’’), New York

Mercantile Exchange, Coffee, Sugar &

Cocoa Exchange, Inc., Chicago Board of

Trade, and the Futures Industry

Association. The Commission issued a

public summary of these proceedings on

May 10, 1996, entitled the ‘‘Market

Automation Briefings-Commission

Summary.’’

The Commission has recognized the

important business benefits that can

result from electronic order routing

systems.7 The Commission also has

emphasized that the FTPA ‘‘does not

mandate that its enhanced audit trail

requirements be met through electronic

means.’’ 8 Nevertheless, the Commission

believes that ‘‘the effective use of

technology [will ultimately] * * *

provide safer, more efficient, wellsupervised markets.’’ 9

II. Staff No-Action Positions Previously

Taken Regarding Electronic OrderRouting Systems

To date, the Commission’s Division of

Trading and Markets (‘‘Division’’), in

consultation with the Commission’s

Office of Information Resources

Management (‘‘OIRM’’), has issued four

no-action letters relating to electronic

order-routing systems. Each of the noaction letters provided that the use of a

specified electronic order-routing

system was not inconsistent with the

‘‘written’’ record preparation

requirements of Commission Regulation

1.35. Two letters addressed systems

which involved transmission of orders

to and from a trading pit. One of those

letters dealt with a firm proprietary

system 10 and the other an exchange

system.11 The two other letters involved

firm proprietary electronic off-floor

order management systems.12

Essentially, those systems provide for

the electronic generation, modification,

and maintenance of a firm’s ‘‘office’’

orders, that is, both discretionary and

non-discretionary orders required to be

prepared pursuant to Commission

Regulation 1.35(a–1)(1).

In assessing both the Timber Hill

System 13 and the TOPS–CUBS

Program,14 Division and OIRM staff

found both systems are used to generate,

in electronic form, all of the customer

order information required by

Commission Regulation 1.35. In this

regard, both the Timber Hill System and

the TOPS–CUBS Program capture all

modifications made to a customer order,

including changes and/or cancellations,

as well as the times of such

modifications to the nearest second.

Moreover, in those cases where an order

is filled partially, both the Timber Hill

System and the TOPS–CUBS Program

reflect the actual quantity that has been

executed and timestamp the report of

the partial execution to the nearest

second. Commission staff also found

that both the Timber Hill System and

the TOPS–CUBS Program record the

necessary Regulation 1.35 times for

receipt of customer orders and report of

execution times from the trading pit and

do so more precisely than is required

under the one minute standard in

Regulation 1.35.

With respect to the storage of

customer order data, both the Timber

Hill System 15 and the TOPS–CUBS

Program 16 maintain Commission

Regulation 1.35 order information 17 for

the statutorily required five-year time

period, as provided under Regulation

1.31.18 The staff found that both systems
Federal Register / Vol. 62, No. 34 / Thursday, February 20, 1997 / Rules and Regulations 7677

regulations shall be kept for a period of five years

from the date thereof and shall be readily accessible

during the first [two] years of the [five] year period.

All such books and records shall be open to

inspection by any representative of the Commission

or the U.S. Department of Justice [(’’DOJ’’)].

19See the Division’s June 14, 1996 letter to

Stephen Szarmack of the CME regarding the CME’s

request for no-action relief for the six-month pilot

TOPS–CUBS Program at p. 13.

20For reasons unrelated to applicable regulatory

requirements, the implementation of both of these

systems has been delayed.

21 In summary, the AORTA and OMS systems

operate as follows: sales personnel prepare a

computerized office order ‘‘ticket,’’ instead of a

paper ticket, immediately upon receipt of a

customer order and enter all of the customer order

information currently required under Regulation

1.35. Both systems record, automatically, the

precise time to the nearest second at which an order

was entered. Upon order entry, sales personnel then

send orders to the floors by telephone and indicate

by keystroke that the order has been transmitted.

Both systems automatically record a second time

indicating when the order was transmitted to the

floor. Fill information, including the report of

execution time, is transmitted back from the floor

to sales personnel, who enter that information into

their system.

22This exceeds the requirements of Commission

Regulation 1.35(a)(a–1)(i), which calls for the time

a customer order was received and, for options, also

the time the order is transmitted for execution.

23AORTA stores all records of customer orders on

optical disk. Records produced and retained by

AORTA are available for production to the

Commission or the DOJ in hard copy, on diskette,

or on CD–ROM.

All records of customer orders generated on OMS

are stored on Morgan Stanley’s Sybase Relational

Database Management System (‘‘Sybase’’). Morgan

Stanley supplements storage of data on Sybase with

a hard copy/microfiche regime under which all

transaction-related information is reproduced from

Sybase on a daily basis and kept either in hard copy

or microfiche for five years.

24 If an order-routing system did not satisfy any

of the standards set forth herein, then the operator

of the system would still be able to request an

individual no-action position as appropriate.

25 In particular, the Commission notes that it is

critical for such systems to satisfy the account

identification requirements of Regulation 1.35.

26See the Commission’s Regulation 1.31 final

rulemaking, which allows production of computergenerated records on optical disk to be immediately

substituted for hard copy reports for purposes of

record storage. 58 FR 27458 (May 10, 1993) at

27460. The Commission also notes that it may be

necessary to amend Regulation 1.31 to account for

further technological developments.

were not inconsistent with that

regulation, which permits data

generated in electronic form to be

maintained in optical media and in

other forms. In addition, all Regulation

1.35 order information stored in

connection with the Timber Hill System

and the TOPS–CUBS Program, as

described above, is made available, in a

timely manner, for access by the

Commission upon request in hard copy

or machine readable form.

With respect to the TOPS–CUBS

Program, Commission staff noted that

the Program’s ability to record

electronically and automatically

required Regulation 1.35 customer order

information, including order-related

times, enhances the preparation of

customer data in terms of accuracy and

detection of changes and should provide

regulatory benefits.19 The Timber Hill

System provides similar benefits.

As previously noted, the two other

staff no-action letters relate to electronic

office order management systems. Those

systems involve the electronic

generation, maintenance and retention

of office orders related to exchange

trading. In general, the systems are

intended to increase the efficiency with

which these firms manage their order

books, including through increased

integration with other firm and

customer activities. To date, both the

Goldman Sachs AORTA system and the

Morgan Stanley OMS system do not

involve electronic transmission of

orders to and from the exchange floor.20

Nonetheless, these systems involve

issues similar to those relating to the

Timber Hill System and the TOPS–

CUBS Program, but within the confines

of their more limited operational scope.

In assessing the AORTA and OMS

systems, Division and OIRM staff found

that both systems record, in electronic

form, all of the customer order

information required by Commission

Regulation 1.35 for office orders.21 In

addition, both systems were found to

capture the time of order entry, the time

of the transmission of a customer order

to the floor, and the time that a sales

person enters order fill (partial or

complete) information into his system.22

Both AORTA and OMS record any

change to the customer order

information, including the identity of

the sales person making any change and

the time of such change.

With respect to data storage, both

AORTA and OMS were found to satisfy

the record retention requirements of

Commission Regulation 1.31.23

Moreover, both of those systems were

found to provide regulatory benefits in

that they enhance the standards for

office order preparation as provided

under Commission regulation 1.35.

III. Discussion

The Commission believes that it is

appropriate to take into account and to

facilitate automation developments that

are occurring with respect to exchangerelated trading. The Commission also

believes that it is preferable to do so

through the issuance of this Advisory

rather than through the case-by case

approach taken by staff in response to

the aforementioned proposals for

electronic order-routing systems. This

Advisory will enable new order routing

systems to come on line without the

necessity of first seeking a no-action

position regarding the ‘‘written’’ record

requirements of Commission Regulation

1.35. As a result, the important business

and regulatory benefits these systems

can provide will be fostered.

For an electronic order-routing system

to be covered by this Advisory, it must

satisfy the standards discussed below.24

Those standards are consistent with the

terms of the staff no-action positions

previously taken regarding such systems

and take cognizance of such systems’

enhanced operational capabilities.

To the extent that an electronic orderrouting system captures information

required under Commission Regulation

1.35(a–1)(1), (2)(i), (4), and/or (d), and

provided such system satisfies the

standards set forth below, a ‘‘written’’

record need not be prepared. To the

extent that a system is intended to

satisfy one or more of those provisions,

then the system must include all

information that otherwise would be

required to be in written form.

Moreover, insofar as a system is used to

comply with any one or more of the

foregoing sections, it must include all

information required by that

section(s).25

The electronic record of a customer

order generated by an electronic orderrouting system must include any and all

modifications made thereto. The record

must include any changes and/or

cancellations. All order-related times

required under Commission Regulation

1.35, as well as the times for all

modifications, are to be captured to the

highest level of precision achievable by

the operating system. In this regard, the

Commission’s experience is that these

systems have the capability, at a

minimum, to capture times to the

second. Therefore, the Commission is

requiring that such times must be

accurate at least to the second. In

addition, the times captured must not

use a clock that can be modified by the

person entering the order.

These systems also need to conform to

the Commission’s record keeping

requirements as provided in

Commission Regulation 1.31 for

computer-generated records. Pursuant to

that rule, computer-generated records

can be substituted for a hard copy report

when produced and maintained on

optical disk in conformity with 1.31(d),

microfilm, or microfiche. A computergenerated record used in lieu of a hard

copy must be transferred to one of these

three permitted non-erasable media ‘‘as

soon as is feasible.’’ 26 In addition,

‘‘appropriate safeguards’’ must be in

place to protect any such records

temporarily stored in erasable form so as
7678 Federal Register / Vol. 62, No. 34 / Thursday, February 20, 1997 / Rules and Regulations

27 Id.

28 Id. at 27465.

to prohibit unauthorized access to the

records and to provide for a record of

the identity of the persons who access

such records and of any modifications

made.27 In addition, assurance must be

provided that a computer-generated

record will be made readily available in

machine-readable media or hard copy to

the Commission or DOJ upon request.

Moreover, records stored on ‘‘machine

readable media must use a format and

coding structure’’ specified in such a

request by the Commission or DOJ.28

The Commission recognizes that the

development of electronic order-routing

systems continues to be in flux. The

Commission intends to continue to

monitor that process with a view toward

providing further guidance by advisory

or rule in the future. Among other

things, the Commission will evaluate

the manner in which electronic orderrouting systems may interface with

other audit trail recordkeeping practices

in place at an exchange.

IV. Conclusion

To the extent that a customer order is

prepared and transmitted to and

reported from an exchange trading pit

by an electronic order-routing system, or

a customer order is prepared by an

electronic off-floor order management

system, and the standards set forth

below are satisfied, then the ‘‘written’’

record requirements of Commission

Regulation 1.35(a–1)(1), (a–1)(2)(i), (a–

1)(4), and/or (d) will be deemed

satisfied by the electronic record

generated by the system. Specifically,

such electronic records must:

(1) Include the customer order

information required under Commission

Regulation 1.35.(a–1)(1), (2)(i), (a–1)(4)

and/or 1.35(d);

(2) Include any modification,

including any change and/or

cancellation, that is made to an order

and indicate the time the modification

is recorded in the system;

(3) Record all Commission-required

and other order-related times, including

order entry and exit times, and the time

of any modification made to a customer

order, including any change and/or

cancellation, to the highest level of

precision achievable by the operating

system, but at least to the second. The

times captured must not use a clock that

can be modified by the person entering

the order;

(4) Be kept in hard copy and/or

allowable hard copy substitution media,

as provided under Commission

Regulation 1.31. The stored records

shall be open to inspection by the

Commission or DOJ as required under

Commission Regulation 1.31 and be

made readily available to the

Commission or DOJ in machinereadable media or hard copy upon

request. Records stored on machinereadable media must use a format and

coding structure specified in the

Commission request. To the extent that

records temporarily are stored in

erasable form, appropriate security

measures must be implemented by the

system operator to prohibit any

unauthorized access to the records and

to maintain an accurate record of when

and by whom records are accessed or

modified.

Issued in Washington, DC on February 12,

1997.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 97–4004 Filed 2–19–97; 8:45 am]

BILLING CODE 6351–01–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 173

[Docket No. 96F–0184]

Secondary Direct Food Additives

Permitted in Food for Human

Consumption; Sulphopropyl Cellulose

AGENCY: Food and Drug Administration,

HHS.

ACTION: Final rule.

SUMMARY: The Food and Drug

Administration (FDA) is amending the

food additive regulations to provide for

a change in the level of reactants for

sulphopropyl cellulose ion-exchange

resin for the recovery and purification of

proteins for food use. This action is in

response to a petition filed by Life

Technologies, Inc.

DATES: Effective February 19, 1997;

written objections and requests for a

hearing by March 21, 1997.

ADDRESSES: Submit written objections to

the Dockets Management Branch (HFA–

305), Food and Drug Administration,

12420 Parklawn Dr., rm. 1–23,

Rockville, MD 20857.

FOR FURTHER INFORMATION CONTACT:

Andrew D. Laumbach, Center for Food

Safety and Applied Nutrition (HFS–

217), Food and Drug Administration,

200 C St. SW., Washington, DC 20204,

202–418–3071.

SUPPLEMENTARY INFORMATION: In a notice

published in the Federal Register of

July 3, 1996 (61 FR 34852), FDA

announced that a food additive petition

(FAP 6A4500) had been filed by Life

Technologies, Inc., 8400 Helgerman Ct.,

Gaithersburg MD 20874. The petition

proposed to amend the food additive

regulations in § 173.25 (21 CFR 173.25)

to provide for a change in the level of

the reactants for sulphopropyl cellulose

ion-exchange resin for the recovery and

purification of proteins for food use.

The amendment proposed that the

amount of epichlorohydrin plus

propylene oxide employed does not

exceed 250 percent by weight of the

starting quantity of cellulose. The

current regulation provides that the

amount of epichlorohydrin plus

propylene oxide employed does not

exceed 61 percent by weight of the

starting quantity of cellulose.

In the Federal Register of April 22,

1991 (56 FR 16266), FDA published a

final rule that amended the regulation

under § 173.25 to provide for the use of

the ion-exchange resin and the starting

materials used to manufacture the

additive. The amendment to the

regulation was based upon the

information provided in FAP 6A3905.

In the final rule of April 22, 1991, the

agency stated that while the ionexchange resin has not been shown to

cause cancer, it may contain small

amounts of the starting materials

epichlorohydrin (ECH) and propylene

oxide (PO) as byproducts of its

production. Because the chemicals ECH

and PO have been shown to cause

cancer in test animals, the agency

conducted a quantitative risk

assessment procedure to calculate the

risk from the use of ECH and PO. Based

on the results of the risk assessment, the

agency concluded in the final rule of

April 22, 1991, that there was a

reasonable certainty of no harm from

exposure to ECH and PO that might

result from the proposed use of the

additive.

Recently, the agency was advised that

the levels of the starting materials for

the resin, ECH and PO, that are listed

under § 173.25(a)(20) need to be

amended. The petitioner discovered that

the information in FAP 6A3905 that was

used to calculate the levels of ECH and

PO in the listings for the regulation

contained errors that led to an

underestimation of the actual levels of

ECH and PO used in the production of

the resin. A new petition (FAP 6A4500)

was submitted to correct the regulation

by listing the actual ratios of the starting

materials ECH and PO that are currently

being used in the manufacture of the

ion-exchange resin.

The agency has reviewed the

information in both petitions 6A3905

and 6A4500, and it has determined that