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CFTC Issues Interpretation Concerning Retail Commodity Contracts Delivered within 28 Days _ August 2013

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CFTC Issues Interpretation Concerning Retail Commodity Contracts Delivered within 28 Days _  August 2013 Powered By Docstoc
					                                              52426              Federal Register / Vol. 78, No. 164 / Friday, August 23, 2013 / Rules and Regulations

                                                Issued in College Park, Georgia, on August            transparency, and promote market                         2(c)(2)(D)(ii)(III)(aa), accurately
                                              16, 2013.                                               integrity within the financial system by,                construes the statutory language.12 The
                                              Kip B. Johns,                                           among other things: (1) Providing for the                Commission received several public
                                              Manager, Operations Support Group, Eastern              registration and comprehensive                           comments on the Interpretation. After
                                              Service Center, Air Traffic Organization.               regulation of swap dealers and major                     thoroughly reviewing those comments,
                                              [FR Doc. 2013–20512 Filed 8–22–13; 8:45 am]             swap participants; (2) imposing clearing                 the Commission has determined to
                                              BILLING CODE 4910–13–P                                  and trade execution requirements on                      clarify its Interpretation in response to
                                                                                                      standardized derivative products; (3)                    the comments received.
                                                                                                      creating robust recordkeeping and real-
                                                                                                      time reporting regimes; and (4)                          II. Summary of Comments
                                              COMMODITY FUTURES TRADING
                                              COMMISSION                                              enhancing the Commission’s                               A. Comments Generally
                                                                                                      rulemaking and enforcement authorities                      The Commission received 13
                                              17 CFR Part 1                                           with respect to, among others, all                       comments in response to its
                                                                                                      registered entities and intermediaries                   Interpretation.13 The comments
                                              RIN 3038–AD64
                                                                                                      subject to the Commission’s oversight.                   included 11 comment letters that
                                              Retail Commodity Transactions Under                        In addition, section 742(a) of the
                                                                                                                                                               addressed the Interpretation. These 11
                                              Commodity Exchange Act                                  Dodd-Frank Act amends section 2(c)(2)
                                                                                                                                                               comment letters were submitted by
                                                                                                      of the CEA to add a new subparagraph,
                                              AGENCY:  Commodity Futures Trading                                                                               entities representing a broad range of
                                                                                                      section 2(c)(2)(D) of the CEA,4 entitled
                                              Commission.                                                                                                      interests, including a self-regulatory
                                                                                                      ‘‘Retail Commodity Transactions.’’ New
                                                                                                                                                               organization,14 precious metals dealers
                                              ACTION: Interpretation.                                 CEA section 2(c)(2)(D) broadly applies
                                                                                                      to any agreement, contract, or                           and depository companies,15 law
                                              SUMMARY:   On December 14, 2011, the                    transaction in any commodity that is                     firms,16 trade associations comprised of
                                              Commodity Futures Trading                               entered into with, or offered to (even if                energy producers and suppliers,17 and
                                              Commission (‘‘Commission’’ or                           not entered into with), a non-eligible                   electricity and natural gas suppliers.18
                                              ‘‘CFTC’’) issued in the Federal Register                                                                            Of the 11 comment letters addressing
                                                                                                      contract participant or non-eligible
                                              an interpretation (‘‘Interpretation’’)                                                                           the Interpretation, two voiced general
                                                                                                      commercial entity on a leveraged or
                                              regarding the meaning of the term                                                                                support for the Interpretation. For
                                                                                                      margined basis, or financed by the
                                              ‘‘actual delivery,’’ as set forth in the                                                                         example, NFA stated:
                                                                                                      offeror, the counterparty, or a person
                                              Commodity Exchange Act. The                             acting in concert with the offeror or                      NFA fully supports the Commission’s
                                              Commission also requested public                        counterparty on a similar basis.5 New                    proposed interpretation of the term [actual
                                              comment on whether the Interpretation                                                                            delivery] and believes that it is consistent
                                                                                                      CEA section 2(c)(2)(D) further provides                  with the statutory language.
                                              accurately construed the statutory                      that such an agreement, contract, or
                                              language. In response to the comments                   transaction shall be subject to CEA                         The comment letter submitted by
                                              received, the Commission has                            sections 4(a),6 4(b),7 and 4b 8 as if the                DGG expressed its appreciation of the
                                              determined to clarify its Interpretation.               agreement, contract, or transaction was                  Commission’s efforts to ‘‘curtail any
                                              DATES: Effective August 23, 2013.                       a contract of sale of a commodity for                    fraudulent retail commodity
                                              FOR FURTHER INFORMATION CONTACT:                        future delivery.9                                        transactions occurring by unscrupulous
                                              Rosemary Hollinger, Regional Counsel,                      New CEA section 2(c)(2)(D) excepts                    actors.’’ DGG further urged the
                                              Division of Enforcement, 312–596–0538,                  certain transactions from its application.               Commission to consider delivery of
                                              rhollinger@cftc.gov, or Martin B. White,                In particular, new CEA section                           precious metals to affiliates of the seller,
                                              Assistant General Counsel, Office of the                2(c)(2)(D)(ii)(III)(aa) 10 excepts a contract            but not to the seller itself, as
                                              General Counsel, 202–418–5129,                          of sale that results in actual delivery                  constituting actual delivery under new
                                              mwhite@cftc.gov, Commodity Futures                      within 28 days or such other longer                      CEA section 2(c)(2)(D)(ii)(III)(aa), stating
                                              Trading Commission, Three Lafayette                     period as the Commission may                             that ‘‘[w]hile we understand the CFTC’s
                                              Centre, 1155 21st Street NW.,                           determine by rule or regulation based                    desire to ensure, among other things,
                                              Washington, DC 20581.                                   upon the typical commercial practice in                  that the seller actually has the
                                              SUPPLEMENTARY INFORMATION:                              cash or spot markets for the commodity                   commodity to deliver, an affiliate of one
                                                                                                      involved.11                                              of the limited types of depositories
                                              I. Background                                              On December 14, 2011, the                             described in Example 2 [of the
                                                 On July 21, 2010, President Obama                    Commission issued an Interpretation                      Interpretation] are unlikely to be the
                                              signed the Dodd-Frank Wall Street                       inviting public comment on whether its
                                                                                                                                                                 12 Retail Commodity Transactions Under
                                              Reform and Consumer Protection Act                      stated interpretation of the term ‘‘actual
                                                                                                                                                               Commodity Exchange Act, 76 FR 77670 (Dec. 14,
                                              (‘‘Dodd-Frank Act’’).1 Title VII of the                 delivery,’’ as used in new CEA section                   2011).
                                              Dodd-Frank Act 2 amended the                                                                                       13 The comment file may be accessed at http://
                                                                                                        47   U.S.C. 2(c)(2)(D).
                                              Commodity Exchange Act (‘‘CEA’’) 3 to                                                                            comments.cftc.gov/PublicComments/
                                                                                                        57   U.S.C. 2(c)(2)(D)(i).
                                              establish a comprehensive new                                                                                    CommentList.aspx?id=1124.
                                                                                                         6 7 U.S.C. 6(a) (prohibition against off-exchange       14 National Futures Association (NFA).
                                              regulatory framework for swaps and                      contracts of sale of a commodity for future                15 Dillon Gage Group (DGG) and Monex Deposit
                                              security-based swaps. The legislation                   delivery).                                               Company and its affiliate (MDC).
                                              was enacted to reduce risk, increase                       7 7 U.S.C. 6(b) (regulation of foreign boards of        16 J.B. Grossman P.A. (JBG), Greenberg Traurig,
                                                                                                      trade with United States participants).                  LLP (GBT), and Rothgerber Johnson & Lyons LLP
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                                                1 See Dodd-Frank Wall Street Reform and                  8 7 U.S.C. 6b (prohibition against fraud).
                                                                                                                                                               (RJL).
                                              Consumer Protection Act of 2010, Public Law 111–           9 7 U.S.C. 2(c)(2)(D)(iii).                             17 National Energy Markets Association (NEM),
                                              203, 124 Stat. 1376 (2010). The text of the Dodd-          10 7 U.S.C. 2(c)(2)(D)(ii)(III)(aa).                  Retail Energy Supply Association (RESA), and
                                              Frank Act may be accessed at http://www.cftc.gov/          11 The Commission has not adopted any                 Commercial Energy Working Group (CEWG).
                                              LawRegulation/OTCDERIVATIVES/index.htm.                 regulations permitting a longer actual delivery            18 Constellation NewEnergy, Inc., Green
                                                2 Pursuant to section 701 of the Dodd-Frank Act,
                                                                                                      period for any commodity pursuant to new CEA             Mountain Energy Company, Direct Energy Services,
                                              Title VII may be cited as the ‘‘Wall Street             section 2(c)(2)(D)(ii)(III)(aa). Accordingly, the 28-    LLC, Exelon Energy Company, Reliant Energy Retail
                                              Transparency and Accountability Act of 2010.’’          day actual delivery period set forth in this provision   Holdings, LLC, Liberty Power Corporation, and
                                                3 7 U.S.C. 1 et seq.                                  remains applicable to all commodities.                   Champion Energy Services, LLC.



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                                                                 Federal Register / Vol. 78, No. 164 / Friday, August 23, 2013 / Rules and Regulations                                          52427

                                              seller ‘fraudsters’ Senator Lincoln had                 2(c)(2)(D)(ii)(III)(aa) requires                        with any limitation imposed on
                                              in mind.’’                                              consideration of evidence regarding                     acceptable depositories or the precise
                                                 Two of the comment letters submitted                 delivery beyond the four corners of                     form of delivery. The Commission has
                                              by law firms generally did not support                  contract documents;’’ and ‘‘in                          considered these comments and has
                                              the Interpretation. GBT stated that                     determining whether actual delivery has                 determined to clarify the intent behind
                                              neither the Dodd-Frank Act nor its                      occurred within 28 days, the                            these examples.
                                              legislative history indicated Congress’s                Commission will employ a functional                       The examples are non-exclusive and
                                              desire to limit the depositories to which               approach and examine how the                            are included to provide the public with
                                              actual delivery could be made, and JBG                  agreement, contract, or transaction is                  guidance on how the Commission will
                                              voiced its view that delivery in the                    marketed, managed, and performed,                       apply the relevant factors enumerated in
                                              context of precious and industrial                      instead of relying solely on language                   the Interpretation in making its
                                              metals requires only transfer of title to               used by the parties in the agreement,                   determination of whether actual
                                              metal, not physical delivery of metal.                  contract, or transaction.’’ 19 Further, no              delivery has occurred within the
                                                 The third comment letter submitted                   comment letters criticized, expressed                   meaning of new CEA section
                                              by a law firm, RJL, was submitted on                    disagreement with, or questioned the                    2(c)(2)(D)(ii)(III)(aa). Examples 1 and 2
                                              behalf of precious metals dealers. RJL                  relevant factors the Commission                         do not encompass all scenarios in which
                                              requested clarification of when the                     enumerated in the Interpretation:                       the Commission may determine that
                                              Commission will consider the 28 days                    Ownership, possession, title, and                       actual delivery has occurred, nor do
                                              in new CEA section 2(c)(2)(D)(ii)(III)(aa)              physical location of the commodity                      Examples 3, 4, and 5 encompass all
                                              to begin and urged the Commission to                    purchased or sold, both before and after                scenarios in which the Commission may
                                              allow for delivery of precious metals to                execution of the agreement, contract, or                determine that actual delivery has not
                                              additional depositories beyond those                    transaction; the nature of the                          occurred. Specifically, with regard to
                                              described in the Interpretation. RJL also               relationship between the buyer, seller,                 Example 2, the Commission may
                                              requested clarification, as did MDC, a                  and possessor of the commodity                          determine that actual delivery has
                                              retail precious metals dealer, of whether               purchased or sold; and the manner in                    occurred if a commodity is delivered to
                                              the offset of a precious metals purchase                which the purchase or sale is recorded                  an affiliate of the seller or is already
                                              prior to transfer of title to the customer              and completed.20 Accordingly, the                       physically located at a depository, so
                                              and delivery of the precious metals to a                Commission will assess whether any                      long as the commodity is otherwise
                                              depository within 28 days would cause                   given transaction results in actual                     delivered in accordance with the
                                              the original purchase to become a                       delivery within the meaning of new                      methods described in Example 2, if a
                                              prohibited transaction under new CEA                    CEA section 2(c)(2)(D)(ii)(III)(aa) by                  careful consideration of the other
                                              section 2(c)(2)(D).                                     employing the functional approach and                   relevant factors enumerated in the
                                                 Finally, four of the comment letters                 considering the factors set forth in the                Interpretation demonstrates that the
                                              were submitted by energy suppliers or                   Interpretation.                                         purported delivery is not simply a sham
                                              trade associations comprised of energy                                                                          and that actual delivery has occurred
                                                                                                      2. When the 28-Day Period Begins                        within the meaning of new CEA section
                                              producers and suppliers, and they
                                              generally requested clarification of                       In response to the comment from RJL,                 2(c)(2)(D)(ii)(III)(aa). Conversely, the
                                              whether new CEA section 2(c)(2)(D)                      the Commission is clarifying when it                    Commission may determine that actual
                                              and/or its exceptions apply to the sale                 will consider the 28-day period in new                  delivery has not occurred if a
                                              and delivery of physical energy                         CEA section 2(c)(2)(D)(ii)(III)(aa) to                  commodity is purportedly delivered to
                                              commodities, such as electricity and                    begin. The Commission has determined                    an affiliate of the seller, but the
                                              natural gas, to industrial, commercial,                 that the most practical point at which to               Commission is unable to obtain
                                              and/or retail customers on a recurring                  begin counting the 28 days is the date                  sufficient assurances within a
                                              basis. For example, NEMA requested:                     on which the agreement, contract, or                    reasonable period of time that the
                                                                                                      transaction is entered into. This                       purported delivery is not simply a
                                              that the Commission clarify that the type of
                                                                                                      approach is consistent with the                         sham.
                                              transactions which its retail energy marketer
                                              members typically enter into with residential           functional approach the Commission                      4. Offsetting of Transactions
                                              and commercial customers, in which they                 will take in determining whether actual
                                              contract with the customer to provide                   delivery has occurred, and it should                       Two commenters, in response to
                                              physical energy supply (electricity or natural          provide industry participants and the                   Example 5 of the Interpretation,
                                              gas) for terms that regularly in the course of          public with a readily ascertainable date                requested clarification of whether the
                                              business contemplate delivery of the physical           for determining whether actual delivery                 offset of a precious metals purchase
                                              energy commodity in excess of 28 days, were             has occurred within the meaning of new                  prior to transfer of title to the customer
                                              not intended and should not be interpreted                                                                      and delivery of the precious metals to a
                                              to constitute ‘retail commodity transactions’
                                                                                                      CEA section 2(c)(2)(D)(ii)(III)(aa).
                                                                                                                                                              depository within 28 days would cause
                                              under the Act.                                          3. Interpretation Examples                              the original purchase to become a
                                              B. Specific Comments                                       The Interpretation included five                     prohibited transaction under new CEA
                                                                                                      examples to illustrate how the                          section 2(c)(2)(D). After careful
                                              1. Functional Approach and Relevant                                                                             consideration of this comment, the
                                                                                                      Commission would determine whether
                                              Factors                                                                                                         Commission has determined that
                                                                                                      actual delivery has occurred within the
                                                 Significantly, no commenters                         meaning of new CEA section                              Example 5 accurately illustrates the
                                              criticized, expressed disagreement with,                2(c)(2)(D)(ii)(III)(aa), and several                    Commission’s views of whether actual
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                                              or questioned the underlying foundation                 comment letters urged the Commission                    delivery will have occurred under the
                                              for the Commission’s approach in                        to allow for delivery of commodities to                 circumstances described in Example 5.
                                              determining whether ‘‘actual delivery’’                 depositories beyond those described in                  However, the Commission recognizes
                                              has occurred, as set forth in the                       Example 2 or expressed disagreement                     that a customer may request to cancel a
                                              Interpretation: ‘‘The determination of                                                                          purchase of a commodity prior to actual
                                              whether ‘actual delivery’ has occurred                    19 76    FR 77670, 77672 (Dec. 14, 2011).             delivery of the commodity within 28
                                              within the meaning of new CEA section                     20 Id.                                                days due to extraordinary market


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                                              52428                Federal Register / Vol. 78, No. 164 / Friday, August 23, 2013 / Rules and Regulations

                                              circumstances. Accordingly, the                            does this interpretation alter any                     the commodity purchased by the buyer,
                                              Commission will not prosecute a seller                     statutory interpretation or statement of               including any portion of the purchase made
                                              for permitting such a cancellation,                        Commission policy relating to the                      using leverage, margin, or financing, into the
                                                                                                                                                                possession of the buyer; and (2) has
                                              provided that the seller does so only on                   forward contract exclusion.24                          transferred title to that quantity of the
                                              limited occasions and at the customer’s                       In the view of the Commission, the                  commodity to the buyer.
                                              request, and further provided that the                     determination of whether ‘‘actual                         Example 2: Actual delivery will have
                                              customer does not enter into a                             delivery’’ has occurred within the                     occurred if, within 28 days, the seller has: (1)
                                              subsequent transaction within three                        meaning of new CEA section                             Physically delivered the entire quantity of
                                              business days of such cancellation.                        2(c)(2)(D)(ii)(III)(aa) requires                       the commodity purchased by the buyer,
                                                                                                         consideration of evidence regarding                    including any portion of the purchase made
                                              5. Energy Producers and Suppliers                          delivery beyond the four corners of                    using leverage, margin, or financing, whether
                                                 Four comment letters requested                          contract documents. This interpretation                in specifically segregated or fungible bulk
                                              clarification of whether new CEA                           of the statutory language is based on                  form, into the possession of a depository
                                              section 2(c)(2)(D) and/or any of its                                                                              other than the seller and its parent company,
                                                                                                         Congress’s use of the word ‘‘actual’’ to               partners, agents, and other affiliates, that is:
                                              exceptions apply to the sale and                           modify ‘‘delivery’’ and on the legislative             (a) A financial institution as defined by the
                                              delivery of physical energy commodities                    history of new CEA section                             CEA; (b) a depository, the warrants or
                                              to industrial, commercial, and/or retail                   2(c)(2)(D)(ii)(III)(aa) described above.               warehouse receipts of which are recognized
                                              customers on a recurring basis.                            Consistent with this interpretation of                 for delivery purposes for any commodity on
                                              Specifically, under the scenario                           the statutory language, in determining                 a contract market designated by the
                                              described in these comment letters,                        whether actual delivery has occurred                   Commission; or (c) a storage facility licensed
                                              energy firms enter into fixed price                        within 28 days of the date the                         or regulated by the United States or any
                                              contracts with customers to supply                                                                                United States agency; and (2) has transferred
                                                                                                         agreement, contract, or transaction is
                                                                                                                                                                title to that quantity of the commodity to the
                                              electricity or natural gas to the                          entered into, the Commission will                      buyer.25
                                              customer’s residence or business for a                     employ a functional approach and                          Example 3: Actual delivery will not have
                                              period of one or more years. The                           examine how the agreement, contract, or                occurred if, within 28 days, a book entry is
                                              customer consumes the electricity or                       transaction is marketed, managed, and                  made by the seller purporting to show that
                                              natural gas and subsequently pays for                      performed, instead of relying solely on                delivery of the commodity has been made to
                                              that usage, along with all applicable                      language used by the parties in the                    the buyer and/or that a sale of a commodity
                                              taxes, on a periodic basis. The                            agreement, contract, or transaction. This              has subsequently been covered or hedged by
                                              Commission is not of the view that new                     approach best accomplishes Congress’s                  the seller through a third party contract or
                                                                                                                                                                account, but the seller has not, in accordance
                                              CEA section 2(c)(2)(D) applies to this                     intent when it enacted section 742(a) of               with the methods described in Example 1 or
                                              scenario, particularly in light of the fact                the Dodd-Frank Act and gives full                      2, physically delivered the entire quantity of
                                              that the customer regularly receives                       meaning to Congress’s term ‘‘actual                    the commodity purchased by the buyer,
                                              delivery of and consumes the physical                      delivery.’’                                            including any portion of the purchase made
                                              energy commodity over the term of the                         Relevant factors in this determination              using leverage, margin, or financing, and
                                              contract and periodically pays for that                    include the following: Ownership,                      transferred title to that quantity of the
                                              usage.                                                     possession, title, and physical location               commodity to the buyer, regardless of
                                                                                                         of the commodity purchased or sold,                    whether the agreement, contract, or
                                              III. Commission Interpretation of                                                                                 transaction between the buyer and seller
                                                                                                         both before and after execution of the
                                              ‘‘Actual Delivery’’                                                                                               purports to create an enforceable obligation
                                                                                                         agreement, contract, or transaction,                   on the part of the seller, or a parent company,
                                                 In consideration of the foregoing, the                  including all related documentation; the               partner, agent, or other affiliate of the seller,
                                              Commission issues the following                            nature of the relationship between the                 to deliver the commodity to the buyer.
                                              interpretation to inform the public of                     buyer, seller, and possessor of the                       Example 4: Actual delivery will not have
                                              the Commission’s views as to the                           commodity purchased or sold; and the                   occurred if, within 28 days, the seller has
                                              meaning of the term ‘‘actual delivery’’ as                 manner in which the purchase or sale is                purported to physically deliver the entire
                                              used in new CEA section                                    recorded and completed. The                            quantity of the commodity purchased by the
                                              2(c)(2)(D)(ii)(III)(aa) and to provide the                 Commission provides the following                      buyer, including any portion of the purchase
                                              public with guidance on how the                                                                                   made using leverage, margin, or financing, in
                                                                                                         non-exclusive examples to illustrate                   accordance with the method described in
                                              Commission intends to assess whether                       how it will determine whether actual                   Example 2, and transfer title to that quantity
                                              any given transaction results in actual                    delivery has occurred within the                       of the commodity to the buyer, but the title
                                              delivery within the meaning of the                         meaning of new CEA section                             document fails to identify the specific
                                              statute. This interpretation does not                      2(c)(2)(D)(ii)(III)(aa). The Commission                financial institution, depository, or storage
                                              address the meaning or scope of new                        may also determine that actual delivery                facility with possession of the commodity,
                                              CEA section 2(c)(2)(D)(ii)(III)(bb) 21 or                  has occurred in circumstances beyond                   the quality specifications of the commodity,
                                              any exception to new CEA section                           those described in the first two                       the identity of the party transferring title to
                                              2(c)(2)(D) other than new CEA section                      examples if it can readily determine                      25 Based on Examples 1 and 2, an agreement,
                                              2(c)(2)(D)(ii)(III)(aa). Similarly, this                   within a reasonable period of time that                contract, or transaction that results in ‘‘physical
                                              interpretation does not address the                        the purported delivery is not simply a                 delivery’’ within the meaning of section
                                              meaning or scope of contracts of sale of                   sham and that actual delivery has                      1.04(a)(2)(i)–(iii) of the Model State Commodity
                                              a commodity for future delivery, the                       occurred within 28 days within the                     Code would ordinarily result in ‘‘actual delivery’’
                                              forward contract exclusion from the                                                                               under new CEA section 2(c)(2)(D)(ii)(III)(aa), absent
                                                                                                         meaning of new CEA section                             other evidence indicating that the purported
                                              term ‘‘future delivery’’ set forth in CEA
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                                                                                                         2(c)(2)(D)(ii)(III)(aa).                               delivery is a sham. See Model State Commodity
                                              section 1a(27),22 or the forward contract                    Example 1: Actual delivery will have                 Code § 1.04(a)(2)(i)–(iii), Comm. Fut. L. Rep.
                                              exclusion from the term ‘‘swap’’ set                       occurred if, within 28 days, the seller has: (1)       Archive (CCH) ¶ 22,568 (Apr. 5, 1985). Conversely,
                                              forth in CEA section 1a(47)(B)(ii).23 Nor                                                                         an agreement, contract, or transaction that does not
                                                                                                         Physically delivered the entire quantity of            result in ‘‘physical delivery’’ within the meaning of
                                                                                                                                                                section 1.04(a)(2)(i)–(iii) of the Model State
                                                21 7 U.S.C. 2(c)(2)(D)(ii)(III)(bb).                        24 See, e.g., Statutory Interpretation Concerning   Commodity Code is highly unlikely to result in
                                                22 7 U.S.C. 1a(27).                                      Forward Transactions, 55 FR 39188 (Sept. 25, 1990)     ‘‘actual delivery’’ under new CEA section
                                                23 7 U.S.C. 1a(47)(B)(ii).                               (‘‘Brent Interpretation’’).                            2(c)(2)(D)(ii)(III)(aa).



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                                                                 Federal Register / Vol. 78, No. 164 / Friday, August 23, 2013 / Rules and Regulations                                            52429

                                              the commodity to the buyer, and the                     DEPARTMENT OF HEALTH AND                              of NADA 098–371, NADA 098–374, and
                                              segregation or allocation status of the                 HUMAN SERVICES                                        NADA 123–116, and all supplements
                                              commodity.                                                                                                    and amendments thereto, is withdrawn.
                                                 Example 5: Actual delivery will not have             Food and Drug Administration                          As provided in the regulatory text of
                                              occurred if, within 28 days, an agreement,                                                                    this document, the animal drug
                                              contract, or transaction for the purchase or            21 CFR Parts 510, 520, and 558                        regulations are amended to reflect these
                                              sale of a commodity is rolled, offset, or                                                                     voluntary withdrawals of approval.
                                                                                                      [Docket No. FDA–2013–N–0839]
                                              otherwise netted with another transaction or                                                                     This rule does not meet the definition
                                              settled in cash between the buyer and the                                                                     of ‘‘rule’’ in 5 U.S.C. 804(3)(A) because
                                                                                                      New Animal Drugs; Withdrawal of
                                              seller, but the seller has not, in accordance                                                                 it is a rule of ‘‘particular applicability.’’
                                                                                                      Approval of New Animal Drug
                                              with the methods described in Example 1 or                                                                    Therefore, it is not subject to the
                                                                                                      Applications; Diethylcarbamazine;
                                              2, physically delivered the entire quantity of                                                                congressional review requirements in 5
                                                                                                      Nicarbazin; Penicillin
                                              the commodity purchased by the buyer,                                                                         U.S.C. 801–808.
                                              including any portion of the purchase made              AGENCY:    Food and Drug Administration,
                                              using leverage, margin, or financing, and               HHS.                                                  List of Subjects
                                              transferred title to that quantity of the               ACTION:   Final rule.                                 21 CFR Part 510
                                              commodity to the buyer, regardless of
                                              whether the agreement, contract, or                     SUMMARY:   The Food and Drug                            Administrative practice and
                                              transaction between the buyer and seller                Administration (FDA) is amending the                  procedure, Animal drugs, Labeling,
                                              purports to create an enforceable obligation            animal drug regulations to reflect the                Reporting and recordkeeping
                                              on the part of the seller, or a parent company,         withdrawal of approval of three new                   requirements.
                                              partner, agent, or other affiliate of the seller,       animal drug applications (NADAs) at                   21 CFR Part 520
                                              to deliver the commodity to the buyer.                  the sponsors’ request because the
                                                                                                                                                                Animal drugs.
                                                Issued in Washington, DC, on August 20,               products are no longer manufactured or
                                              2013, by the Commission.                                marketed.                                             21 CFR Part 558
                                              Christopher J. Kirkpatrick,                             DATES: This rule is effective September                 Animal drugs, Animal feeds.
                                              Deputy Secretary of the Commission.                     3, 2013.                                                Therefore, under the Federal Food,
                                                                                                      FOR FURTHER INFORMATION CONTACT:                      Drug, and Cosmetic Act and under
                                              Appendix to Retail Commodity                            David Alterman, Center for Veterinary                 authority delegated to the Commissioner
                                              Transactions Under Commodity                            Medicine (HFV–212), Food and Drug                     of Food and Drugs and redelegated to
                                              Exchange Act—Commission Voting                          Administration, 7519 Standish Pl.,                    the Center for Veterinary Medicine, 21
                                              Summary                                                 Rockville, MD 20855, 240–453–6843,                    CFR parts 510, 520, and 558 are
                                                On this matter, Chairman Gensler and                  email: david.alterman@fda.hhs.gov.                    amended as follows:
                                              Commissioners Chilton, O’Malia, and Wetjen              SUPPLEMENTARY INFORMATION: Phibro
                                                                                                      Animal Health Corp., 65 Challenger Rd.,               PART 510—NEW ANIMAL DRUGS
                                              voted in the affirmative. No Commissioners
                                              voted in the negative.                                  3d Floor, Ridgefield Park, NJ 07660 has               ■ 1. The authority citation for 21 CFR
                                              [FR Doc. 2013–20617 Filed 8–22–13; 8:45 am]             requested that FDA withdraw approval                  part 510 continues to read as follows:
                                                                                                      of NADA 098–371 for use of nicarbazin,
                                              BILLING CODE 6351–01–P                                                                                          Authority: 21 U.S.C. 321, 331, 351, 352,
                                                                                                      penicillin, and roxarsone in 3-way,
                                                                                                                                                            353, 360b, 371, 379e.
                                                                                                      combination drug Type C medicated
                                                                                                      feeds for broiler chickens and NADA                   § 510.600    [Amended]
                                              DEPARTMENT OF HEALTH AND                                098–374 for use of nicarbazin and
                                                                                                                                                            ■  2. In § 510.600, in the table in
                                                                                                      penicillin in 2-way, combination drug
                                              HUMAN SERVICES                                                                                                paragraph (c)(1), remove the entry for
                                                                                                      Type C medicated feeds for broiler
                                                                                                                                                            ‘‘R. P. Scherer North America’’; and in
                                              Food and Drug Administration                            chickens because the products are no
                                                                                                                                                            the table in paragraph (c)(2), remove the
                                                                                                      longer manufactured or marketed.
                                                                                                                                                            entry for ‘‘011014’’.
                                              21 CFR Part 175                                         Accordingly, 21 CFR 558.366 and
                                                                                                      558.460 are being amended to reflect the              PART 520—ORAL DOSAGE FORM
                                              Indirect Food Additives: Adhesives                      withdrawal of approval.                               NEW ANIMAL DRUGS
                                              and Components of Coatings                                 R. P. Scherer North America, P.O. Box
                                                                                                      5600, Clearwater, FL 33518 has                        ■ 3. The authority citation for 21 CFR
                                              CFR Correction                                          requested that FDA withdraw approval                  part 520 continues to read as follows:
                                                                                                      of NADA 123–116 for                                       Authority: 21 U.S.C. 360b.
                                                In Title 21 of the Code of Federal                    Diethylcarbamazine Citrate Capsules
                                              Regulations, Parts 170 to 199, revised as               used in dogs for the prevention of                    § 520.622d    [Removed]
                                              of April 1, 2013, on page 196, in                       heartworm disease because the product                 ■   4. Remove § 520.622d.
                                              § 175.320, in paragraph (c), in the first               is no longer manufactured or marketed.
                                              sentence, revise ‘‘tables 1 and 2 of                    Accordingly, 21 CFR 520.622d is being                 PART 558—NEW ANIMAL DRUGS FOR
                                              § 176.17(c)’’ to read ‘‘tables 1 and 2 of               amended to reflect the withdrawal of                  USE IN ANIMAL FEEDS
                                              § 176.170(c)’’.                                         approval.
                                                                                                         Following this withdrawal of                       ■ 5. The authority citation for 21 CFR
                                              [FR Doc. 2013–20702 Filed 8–22–13; 8:45 am]
emcdonald on DSK67QTVN1PROD with RULES




                                                                                                      approval, R. P. Scherer North America                 part 558 continues to read as follows:
                                              BILLING CODE 1505–01–D
                                                                                                      is no longer the sponsor of an approved                   Authority: 21 U.S.C. 360b, 371.
                                                                                                      application. Accordingly, 21 CFR
                                                                                                      510.600(c) is being amended to remove                 § 558.366    [Amended]
                                                                                                      the entries for these firms.                          ■ 6. In § 558.366, in the table in
                                                                                                         Elsewhere in this issue of the Federal             paragraph (d), in the entry for ‘‘90.8 to
                                                                                                      Register, FDA gave notice that approval               181.6 (0.01 to 0.02 pct)’’, remove the


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Description: CFTC Issues Interpretation Concerning Retail Commodity Contracts that are Delivered within 28 Days _ August 2013