On January 28, 2000, the FAA issued AD 2000-02-33, amendment 39-11551 (65 FR 5742, February 7, 2000), applicable to certain Boeing Model 747-400 series airplanes, to require various inspections and functional tests to detect discrepancies of the thrust reverser control and indication system, and correction of any discrepancy found. That action was prompted by reports indicating that several center drive units (CDU) were returned to the manufacturer of the CDU's because of low holding torque of the CDU cone brake. The actions required by that AD are intended to ensure the integrity of the fail safe features of the thrust reverser system by preventing possible failure modes in the thrust reverser control system that can result in inadvertent deployment of a thrust reverser during flight.

Since the issuance of AD 2000-02-33, the FAA has received information indicating the following:

• Completion of the functional test of the CDU cone brake as referenced in the existing AD is ineffective for Model 747-400 series airplanes having a third locking system installed on the thrust reversers. The test for those airplanes requires an additional step to unlock the electro-mechanical brake prior to accomplishment of the functional test of the cone brake of the center drive unit. This step was omitted from the functional test described in the service bulletins and referenced in paragraph (a) of the existing AD. Therefore, Appendix 1 (including Figure 1) has been added to this AD to provide accurate instructions for airplanes that have a third locking system installed. Paragraph (a) of this AD has been revised to reference Appendix 1 (including Figure 1) as the appropriate source of service information for those airplanes.

• The grace period of 650 flight hours to accomplish the functional test of the cone brake of the CDU is expected to expire for most airplanes by May or June 2000. For airplanes that have been modified to incorporate the third locking system, this would allow accomplishment of an invalid test with potentially misleading results. The valid functional test as described in Appendix 1 (including Figure 1) of this AD imposes no additional burden.

• The previously approved alternative methods of compliance (AMOC) as referenced in paragraph (d)(2) of the existing AD should not have been included in the final rule. The notice of proposed rulemaking was issued as a supersedure, but the final rule was issued as a separate rulemaking action that addressed only those airplanes equipped with General Electric CF6-80C2 series engines; therefore, the AMOC's previously approved in accordance with AD 94-15-05, amendment 39-8976 (59 FR 37655, July 25, 1994), and specified in paragraph (d)(2) of the existing AD, are not applicable. Paragraph (d)(2) of the existing AD has been revised accordingly.

• Paragraph (a) of the existing AD states, “Within 1,000 hours time-in-service after the most recent test of the CDU cone brake performed in accordance with paragraph (b)(1) of AD 94-15-05; or within 650 hours time-in-service after the effective date of this AD, whichever occurs first * * *” The manufacturer has submitted documentation showing similar requirements are contained in paragraph (a) of AD 2000-02-20, amendment 39-11551, which is applicable to Model 767 series airplanes, and which gives the operator a longer compliance time. In that AD, the grace period for the compliance time reads, “* * * or within 650 hours time-in-service after the effective date of this AD, whichever occurs later * * *” Therefore, in light of the information received, the FAA has revised paragraph (a) of this AD accordingly.

Since an unsafe condition has been identified that is likely to exist or develop on other airplanes of this same type design, this AD supersedes AD 2000-02-33 to continue to require various inspections and functional tests to detect discrepancies of the thrust reverser control and indication system, and correction of any discrepancy found. This AD also adds an appendix and revises certain actions in the existing AD.

Since a situation exists that requires the immediate adoption of this regulation, it is found that notice and opportunity for prior public comment hereon are impracticable, and that good cause exists for making this amendment effective in less than 30 days.

Although this action is in the form of a final rule that involves requirements affecting flight safety and, thus, was not preceded by notice and an opportunity for public comment, comments are invited on this rule. Interested persons are invited to comment on this rule by submitting such written data, views, or arguments as they may desire.

Communications shall identify the Rules Docket number and be submitted in triplicate to the address specified under the caption ADDRESSES . All communications received on or before the closing date for comments will be considered, and this rule may be amended in light of the comments received. Factual information that supports the commenter's ideas and suggestions is extremely helpful in evaluating the effectiveness of the AD action and determining whether additional rulemaking action would be needed.

Comments are specifically invited on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify the rule. All comments submitted will be available, both before and after the closing date for comments, in the Rules Docket for examination by interested persons. A report that summarizes each FAA-public contact concerned with the substance of this AD will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2000-NM-93-AD.” The postcard will be date stamped and returned to the commenter.

The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.

The FAA has determined that this regulation is an emergency regulation that must be issued immediately to correct an unsafe condition in aircraft, and that it is not a “significant regulatory action” under Executive Order 12866. It has been determined further that this action involves an emergency regulation under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979). If it is determined that this emergency regulation otherwise would be significant under DOT Regulatory Policies and Procedures, a final regulatory evaluation will be prepared and placed in the Rules Docket.

A copy of it, if filed, may be obtained from the Rules Docket at the location provided under the caption ADDRESSES .

On January 24, 2000, the FAA issued AD 2000-02-20, amendment 39-11538 (65 FR 5229, February 3, 2000), applicable to certain Boeing Model 767 series airplanes, to require tests, inspections, and adjustments of the thrust reverser system. That action also requires installation of a terminating modification, and repetitive follow-on actions. That action was prompted by reports indicating that several center drive units (CDU's) of the thrust reverser system were returned to the manufacturer of the CDU's because of low holding torque of the CDU cone brake. The actions required by that AD are intended to ensure the integrity of the fail safe features of the thrust reverser system by preventing possible failure modes in the thrust reverser control system that can result in inadvertent deployment of a thrust reverser during flight.

Since the issuance of AD 2000-02-20, the FAA has received information indicating that the functional test that is described in Boeing Service Bulletin 767-78A0081, Revision 1, is not applicable to Model 767 series airplanes having a third locking system installed on the thrust reversers. For those airplanes, an additional step is necessary in order to unlock the electro-mechanical brake, prior to accomplishment of the functional test, as described in Appendix 1 (including Figure 1) of the existing AD. If the test is performed on airplanes with the third locking system installed, in accordance with the service bulletin, the system will always pass the test, even if the cone brake has failed. Paragraph (d) of the existing AD does not specifically list which airplanes are required to do the functional test of the cone brake of the CDU, in accordance with Boeing Service Bulletin 767-78A0081, Revision 1; and which are required to do the test in accordance with Appendix 1 (including Figure 1) of the AD. Therefore, paragraph (d) of this AD has been revised to separate the service information requirements for accurate accomplishment of the functional test.

In addition, the grace period of 650 flight hours to accomplish the functional test of the cone brake of the CDU is expected to expire for most airplanes by May or June 2000. For airplanes that have been modified to incorporate the third locking system, this would allow accomplishment of an invalid test with potentially misleading results. The valid functional test as described in Appendix 1 (including Figure 1) of this AD imposes no additional burden.

Since an unsafe condition has been identified that is likely to exist or develop on other airplanes of this same type design, this AD supersedes AD 2000-02-20 to continue to require tests, inspections, and adjustments of the thrust reverser system. The AD also continues to require installation of a terminating modification, and repetitive follow-on actions. In addition, this AD revises certain actions in the existing AD.

Since a situation exists that requires the immediate adoption of this regulation, it is found that notice and opportunity for prior public comment hereon are impracticable, and that good cause exists for making this amendment effective in less than 30 days.

Although this action is in the form of a final rule that involves requirements affecting flight safety and, thus, was not preceded by notice and an opportunity for public comment, comments are invited on this rule. Interested persons are invited to comment on this rule by submitting such written data, views, or arguments as they may desire. Communications shall identify the Rules Docket number and be submitted in triplicate to the address specified under the caption ADDRESSES. All communications received on or before the closing date for comments will be considered, and this rule may be amended in light of the comments received. Factual information that supports the commenter's ideas and suggestions is extremely helpful in evaluating the effectiveness of the AD action and determining whether additional rulemaking action would be needed.

Comments are specifically invited on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify the rule. All comments submitted will be available, both before and after the closing date for comments, in the Rules Docket for examination by interested persons. A report that summarizes each FAA-public contact concerned with the substance of this AD will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2000-NM-94-AD.” The postcard will be date stamped and returned to the commenter.

The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.

The FAA has determined that this regulation is an emergency regulation that must be issued immediately to correct an unsafe condition in aircraft, and that it is not a “significant regulatory action” under Executive Order 12866. It has been determined further that this action involves an emergency regulation under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979). If it is determined that this emergency regulation otherwise would be significant under DOT Regulatory Policies and Procedures, a final regulatory evaluation will be prepared and placed in the Rules Docket. A copy of it, if filed, may be obtained from the Rules Docket at the location provided under the caption ADDRESSES .

This amendment to part 97 of the Federal Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or revokes Standard Instrument Approach Procedures (SIAPs). The complete regulatory description on each SIAP is contained in the appropriate FAA Form 8260 and the National Flight Data Center (FDC)/Permanent (P) Notices to Airmen (NOTAM) which are incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of the Federal Aviation's Regulations (FAR). Materials incorporated by reference are available for examination or purchase as stated above.

The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction of charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR (and FAR) sections, with the types and effective dates of the SIAPs. This amendment also identifies the airport, its location, the procedure identification and the amendment number.

This amendment to part 97 of the Federal Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or revokes SIAPs. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained in the content of the following FDC/P NOTAMs for each SIAP. The SIAP information in some previously designated FDC/Temporary (FDC/T) NOTAMs is of such duration as to be permanent. With conversion to FDC/P NOTAMs, the respective FDC/T NOTAMs have been canceled.

The FDC/P NOTAMs for the SIAPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these chart changes to SIAPs by FDC/P NOTAMs, the TERPS criteria were applied to only these specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a National Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for all these SIAP amendments requires making them effective in less than 30 days.

Further, the SIAPs contained in this amendment are based on the criteria contained in the TERPS. Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This amendment to part 97 of the Federal Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or revokes Standard Instrument Approach Procedures (SIAPs). The complete regulatory description of each SIAP is contained in official FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of the Federal Aviation Regulations (FAR). The applicable FAA Forms are identified as FAA Forms 8260-3, 8260-4, and 8260-5. Materials incorporated by reference are available for examination or purchase as stated above.

The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR (and FAR) sections, with the types and effective dates of the SIAPs. This amendment also identifies the airport, its location, the procedure identification and the amendment number.

This amendment to part 97 is effective upon publication of each separate SIAP as contained in the transmittal. Some SIAP amendments may have been previously issued by the FAA in a National Flight Data Center (NFDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for some SIAP amendments may require making them effective in less than 30 days. For the remaining SIAPs, as effective date at least 30 days after publication is provided.

Further, the SIAPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

By facilitating rapid and widespread information dissemination, the Internet has had a significant impact on capital-raising techniques and, more broadly, on the structure of the securities industry. Today, almost seven million people invest in the U.S. securities markets through online brokerage accounts. 2 To serve this increasing interest in online trading, there has been a surge in online brokerage firms offering an array of financial services. 3 Additionally, many publicly traded companies are incorporating Internet-based technology into their routine business operations, including setting up their own web sites to furnish company and industry information. Some provide information about their securities and the markets in which their securities trade. Investment companies use the Internet to provide investors with fund-related information, as well as shareholder services and educational materials. Issuers of municipal securities also are beginning to use the Internet to provide information about themselves and their outstanding bonds, as well as new offerings of their securities. The increased availability of information through the Internet has helped to promote transparency, liquidity and efficiency in our capital markets.

This release is designed to provide guidance to issuers of all types, including operating companies, investment companies and municipal securities issuers, as well as market intermediaries, on several issues involving the application of the federal securities laws to electronic media. In developing this guidance, we considered the significant benefits that investors can gain from the increased use of electronic media. We also considered the potential for electronic media, as instruments of inexpensive, mass communication, to be used to defraud the investing public. 4 We believe that the guidance advances our central statutory goals: Ensuring full and fair disclosure to investors; promoting the public interest, including investor protection, efficiency, competition and capital formation; and maintaining fair and orderly markets.

One of the key benefits of electronic media is that information can be disseminated to investors and the financial markets rapidly and in a cost-effective and widespread manner. Our recently adopted rules permitting increased communications with security holders and the markets in connection with business combinations and similar transactions should enable issuers to take further advantage of this benefit. 5 Thus far, we have not extended the same flexible treatment to securities offerings aimed at raising capital. For these offerings, we are considering separately the liberalization of communications by issuers and other market participants. 6

Today's interpretive guidance will do the following:

• Facilitate electronic delivery of communications by clarifying that

• Reduce uncertainty regarding permissible web site content to encourage more widespread information dissemination to all investors by clarifying

• Facilitate online offerings by clarifying

We first published our views on the use of electronic media to deliver information to investors in 1995. 11 The 1995 Release focused on electronic delivery of prospectuses, annual reports to security holders and proxy solicitation materials under the Securities Act of 1933, 12 the Securities Exchange Act of 1934  13 and the Investment Company Act of 1940. 14 Our 1996 electronic media release  15 focused on electronic delivery of required information by broker-dealers (including municipal securities dealers) and transfer agents under the Exchange Act and investment advisers under the Investment Advisers Act of 1940. 16

We believe that the framework for electronic delivery established in these releases continues to work well in today's technological environment. Issuers and market intermediaries therefore must continue to assess their compliance with legal requirements in terms of the three areas identified in the releases—notice, access and evidence of delivery. Although we believe that this framework continues to be appropriate, we provide below guidance that will clarify some regulatory issues relating to electronic delivery. 17

As noted above, one of the three elements of satisfactory electronic delivery is obtaining evidence of delivery. The 1995 Release provided that one method for satisfying the evidence-of-delivery element is to obtain an informed consent from an investor to receive information through a particular electronic medium. 18 The 1996 Release stated that informed consent should be made by written or electronic means. 19 Some securities lawyers have concluded that, based on the 1996 Release, telephonic consent generally is not permitted. Others have opined that telephonic consent may be permissible if an issuer or intermediary retains a record of the consent. 20

In today's markets, where speed is a priority, significant matters often are communicated telephonically. It is common (and increasingly popular), for instance, for security holders to vote proxies and even transfer assets over the telephone where permitted under applicable state law. 21 In addition, investors can place orders to trade securities over the telephone. We believe these practices have developed because business can be transacted as effectively over the telephone today as it can in paper. We are of the view, therefore, that an issuer or market intermediary may obtain an informed consent telephonically, as long as a record of that consent is retained. 22 As with written or electronic consent, telephonic consent must be obtained in a manner that assures its authenticity. 23

The 1995 Release stated that consent to electronic delivery could relate to all documents to be delivered by or on behalf of a single issuer. 24 The 1995 Release also stated that an issuer could rely on consent obtained by a broker-dealer or other market intermediary. 25 Some securities lawyers have questioned the permissible scope of consents that are obtained by broker-dealers or banks (or their agents) from investors who hold securities of multiple issuers in their brokerage, trust or other accounts. Specifically, they have asked whether an investor can consent to electronic delivery of all documents of any issuer in which that investor buys or owns securities through a particular intermediary.

We believe that an investor may give a global consent to electronic delivery—relating to all documents of any issuer—so long as the consent is informed. 26 Given the broad scope of a global consent and its effect on an investor's ability to receive important documents, we believe intermediaries should take particular care to ensure that the investor understands that he or she is providing a global consent to electronic delivery. For example, a global consent that is merely a provision of an agreement that an investor is required to execute to receive other services may not fully inform the investor. To best inform investors, broker-dealers could obtain consent from a new customer through an account-opening agreement that contains a separate section with a separate electronic delivery authorization, or through a separate document altogether. We believe that a global consent to electronic delivery would not be an informed consent if the opening of a brokerage account were conditioned upon providing the consent. 27 Therefore, absent other evidence of delivery, 28 we believe that if the opening of an account were conditioned upon providing a global consent, evidence of delivery would not be established.

Similarly, because of the broad scope of a global consent, an investor should be advised of his or her right to revoke the consent at any time and receive all covered documents in paper format. We recognize that a system allowing an investor to revoke consent to electronic delivery with respect to some issuers' documents, but not others, may be difficult to administer. An intermediary might be uncertain about whether or not it has complied with its delivery obligations. Thus, intermediaries, if they wish, may require revocation on an “all-or-none” basis, provided that this policy is adequately disclosed when the consent is obtained.

As noted in the 1995 Release, an informed consent must specify the type of electronic media to be used (for example, a limited proprietary system or an Internet web site). 29 This is particularly true for global consents where multiple documents may be delivered through different media. An investor should not be disadvantaged by inadvertently consenting to electronic delivery through a medium that is not compatible with the investor's computer hardware and software. 30

Although a global consent must identify the various types of electronic media that may be used to constitute an informed consent, it need not specify the medium to be used by any particular issuer. Additionally, the consent need not identify the issuers covered by the consent. If the consent does identify the covered issuers, it also may provide that additional issuers can be added at a later time without further consent. Investors cannot be required to accept delivery via additional media at a later time without further informed consent. 31

The 1995 Release stated that “the use of a particular medium should not be so burdensome that intended recipients cannot effectively access the information provided.”  32 Many issuers have interpreted this statement to preclude delivery of PDF documents which cannot be accessed without special software. Instead, those issuers use hypertext markup language, or HTML, which may be viewed without the need for additional software. 33 We believe that issuers and market intermediaries delivering documents electronically may use PDF if it is not so burdensome as effectively to prevent access. For example, PDF could be used if issuers and intermediaries

• inform investors of the requirements necessary to download PDF when obtaining consent to electronic delivery; and

• provide investors with any necessary software and technical assistance at no cost. 34

The 1995 Release provided a number of examples designed to assist issuers and market intermediaries in meeting their delivery obligations through electronic media. One example provided that documents in close proximity on the same web site menu are considered delivered together. 35 Other examples confirmed the proposition that documents hyperlinked to each other are considered delivered together as if they were in the same paper envelope. 36 The premise underlying these examples has come to be called the “envelope theory.”

The purpose of these examples was to provide assurance to issuers and intermediaries that they are delivering multiple documents simultaneously to investors when so required by the federal securities laws. For example, in a registered offering, sales literature cannot be delivered to an investor unless the registration statement has been declared effective and a final prospectus accompanies or precedes the sales literature. 37 It is easy to establish concurrent delivery when multiple documents are included in one paper envelope that is delivered by U.S. postal mail or a private delivery service. When electronic delivery is used, however, it is somewhat more difficult to establish whether multiple documents may be considered delivered together. The guidance provided in the 1995 Release about the use of “virtual” envelopes was intended to alleviate this difficulty.

Nevertheless, some issuers and intermediaries believe that the envelope theory has created ambiguities as to appropriate web site content when an issuer is in registration. 38 Some securities lawyers have expressed concern that if a Section 10 prospectus is posted on a web site, the operation of the envelope theory causes everything on the web site to become part of that prospectus. They also have raised concerns that information on a web site that is outside of the four corners of the Section 10 prospectus, but in close proximity  39 to it, would be considered free writing. 40

Information on a web site would be part of a Section 10 prospectus only if an issuer (or person acting on behalf of the issuer, including an intermediary with delivery obligations) acts to make it part of the prospectus. For example, if an issuer includes a hyperlink within a Section 10 prospectus, the hyperlinked information would become a part of that prospectus. 41 When embedded hyperlinks are used, 42 the hyperlinked information must be filed as part of the prospectus in the effective registration statement and will be subject to liability under Section 11 of the Securities Act. 43 In contrast, a hyperlink from an external document to a Section 10 prospectus would result in both documents being delivered together, but would not result in the non-prospectus document being deemed part of the prospectus. Issuers nevertheless may be subject to liability under Section 12 of the Securities Act  44 for the external document depending on whether the external document is itself a prospectus or part of one.

With respect to the free writing concern, the focus on the location of the posted prospectus is misplaced. Regardless of whether or where the Section 10 prospectus is posted, the web site content must be reviewed in its entirety to determine whether it contains impermissible free writing. 45 The Commission staff will continue to raise questions about information on an issuer's web site that is either inconsistent with the issuer's Section 10 prospectus or that would constitute an “offer to sell,” “offer for sale” or “offer” under Section 2(a)(3) of the Securities Act.

Municipal securities market participants involved in offering and selling municipal securities face similar issues under Exchange Act Rule 15c2-12  46 in connection with their use of electronic media. Rule 15c2-12 requires municipal securities underwriters of primary offerings to, among other things,

• obtain and review an official statement that the municipal securities issuer deems final;

• send the final official statement to any potential customer; and

• in negotiated sales, send the most recent preliminary official statement, if one exists, to any potential customer.

Issuers have raised a number of questions about their responsibility for the content of their web sites, both when they are in registration and when they are not. It is important for issuers, including municipal securities issuers, to keep in mind that the federal securities laws apply in the same manner to the content of their web sites as to any other statements made by or attributable to them. While many of these questions may be resolved by reference to current law, we recognize that further guidance would be helpful on two fundamental issues affecting web site content. We first consider issuer responsibility for hyperlinked information under the anti-fraud provisions of the federal securities laws. We then discuss the regulation of issuers' web site communications during registered offerings.

Issuers  48 are responsible for the accuracy of their statements that reasonably can be expected to reach investors or the securities markets  49 regardless of the medium through which the statements are made, including the Internet. Some issuers have asked whether they can be held liable under Section 10(b) of the Exchange Act and Rule 10b-5 for third-party information to which they have hyperlinked from their web sites. 50 This concern stems largely from case law  51 and our findings in the 1997 settlement of an enforcement action. 52 These questions focus on the consequences of issuer hyperlinks to analyst research reports, although issuers also have expressed concern about their potential liability for hyperlinks to other information as well.

Whether third-party information is attributable to an issuer depends upon whether the issuer has involved itself in the preparation of the information or explicitly or implicitly endorsed or approved the information. In the case of issuer liability for statements by third parties such as analysts, the courts and we have referred to the first line of inquiry as the “entanglement” theory and the second as the “adoption” theory.

In the case of hyperlinked information, liability under the “entanglement” theory would depend upon an issuer's level of pre-publication involvement in the preparation of the information. 53 In contrast, liability under the “adoption” theory would depend upon whether, after its publication, an issuer, explicitly or implicitly, endorses or approves the hyperlinked information. 54

Below we discuss factors that we believe are relevant in deciding whether an issuer has adopted information on a third-party web site to which it has established a hyperlink. 55 While the factors we discuss below form a useful framework of analysis, we caution that they are neither exclusive nor exhaustive. We are not establishing a “bright line” mechanical test. We do not mean to suggest that any single factor, standing alone, would or would not dictate the outcome of the analysis.

Whether third-party information to which an issuer has established a hyperlink is attributable to the issuer is likely to be influenced by what the issuer says about the hyperlink or what is implied by the context in which the issuer places the hyperlink. An issuer might explicitly endorse the hyperlinked information. For example, a hyperlink might be incorporated in or accompany a statement such as “XYZ's web site contains the best description of our business that is currently available.” Likewise, a hyperlink might be used to suggest that the hyperlinked information supports a particular assertion on an issuer's web site. For example, the hyperlink may be incorporated in or accompany a statement such as, “As reported in Today's Widget, our company is the leading producer of widgets worldwide.” Moreover, even when an issuer remains silent about the hyperlink, the context nevertheless may imply that the hyperlinked information is attributable to the issuer. 56

In the context of a document required to be filed or delivered under the federal securities laws, we believe that when an issuer embeds a hyperlink to a web site within the document, the issuer should always be deemed to be adopting the hyperlinked information. 57 In addition, when an issuer is in registration, if the issuer establishes a hyperlink (that is not embedded within a disclosure document) from its web site to information that meets the definition of an “offer to sell,” “offer for sale” or “offer” under Section 2(a)(3) of the Securities Act, a strong inference arises that the issuer has adopted that information for purposes of Section 10(b) of the Exchange Act and Rule 10b-5. 58

Another factor we would consider in determining whether an issuer has adopted hyperlinked information is the presence or absence of precautions against investor confusion about the source of the information. Hyperlinked information on a third-party web site may be less likely to be attributed to an issuer if the issuer makes the information accessible only after a visitor to its web site has been presented with an intermediate screen that clearly and prominently indicates that the visitor is leaving the issuer's web site and that the information subsequently viewed is not the issuer's. Similarly, there may be less likelihood of confusion about whether an issuer has adopted hyperlinked information if the issuer ensures that access to the information is preceded or accompanied by a clear and prominent statement from the issuer disclaiming responsibility for, or endorsement of, the information. In contrast, the risk of investor confusion is higher when information on a third-party web site is framed  59 or inlined. 60 We are not suggesting, however, that statements and disclaimers will insulate an issuer from liability for hyperlinked information when the relevant facts and circumstances otherwise indicate that the issuer has adopted the information. 61

The presentation of the hyperlinked information by an issuer is relevant in determining whether the issuer has adopted the information. For example, an issuer's efforts to direct an investor's attention to particular information by selectively providing hyperlinks is a relevant consideration in determining whether the information so hyperlinked has been adopted by the issuer. Where a wealth of information as to a particular matter is available, and where the information accessed by the hyperlink is not representative of the available information, an issuer's creation and maintenance of the hyperlink could be an endorsement of the selected information. Similarly, an issuer that selectively establishes and terminates hyperlinks to third-party web sites depending upon the nature of the information about the issuer on a particular site or sites may be viewed as attempting to control the flow of information to investors. Again, this suggests that the issuer has adopted the information during the periods that the hyperlink is operative.

Finally, the layout of the screen containing a hyperlink is relevant in determining whether an issuer will be deemed to have adopted hyperlinked information. Any action to differentiate a particular hyperlink from other hyperlinks on an issuer's web site, through its prominence, size or location, or to draw an investor's attention to the hyperlink, may suggest that the issuer favors the hyperlinked information over other information available to the investor on or through the site. For example, a particular hyperlink might be presented in a different color, type font or size from other hyperlinks on an issuer's web site. Where the method of presenting the hyperlink influences disproportionately an investor's decision to view third-party information, the hyperlinked information is more likely attributable to an issuer.

Because of the increasing use by issuers of web sites to communicate in the ordinary course of business with their security holders, customers, suppliers and others, issuers have asked us for guidance on the permissible content of their Internet communications when they are in registration. 62 An issuer in registration must consider the application of Section 5 of the Securities Act  63 to all of its communications with the public. 64 In our view, this includes information on an issuer's web site as well as information on a third-party web site to which the issuer has established a hyperlink. The Securities Act and accompanying regulations currently limit information about an offering that issuers and persons acting on their behalf may provide to investors to the content of the Section 10 prospectus and any permissible communications under available Securities Act safe harbors. 65 Thus, information on a third-party web site to which an issuer has established a hyperlink that meets the definition of an “offer to sell,” “offer for sale” or “offer” under Section 2(a)(3) of the Securities Act raises a strong inference that the hyperlinked information is attributable to the issuer for purposes of a Section 5 analysis. 66 To ensure compliance with Section 5, an issuer in registration should carefully review its web site and any information on third-party web sites to which it hyperlinks.

An issuer that is in registration should maintain communications with the public as long as the subject matter of the communications is limited to ordinary-course business and financial information, which may include the following:

• advertisements concerning the issuer's products and services;

• Exchange Act reports required to be filed with the Commission;

• proxy statements, annual reports to security holders and dividend notices;

• press announcements concerning business and financial developments;

• answers to unsolicited telephone inquiries concerning business matters from securities analysts, financial analysts, security holders and participants in the communications field who have a legitimate interest in the issuer's affairs; and

• security holders' meetings and responses to security holder inquiries relating to these matters. 67

Statements containing information falling within any of the foregoing categories, or an available Securities Act safe harbor, 68 may be posted on an issuer's web site when in registration, either directly or indirectly through a hyperlink to a third-party web site, including the web site of a broker-dealer that is participating in the registered offering.

Although our original guidance was directed at communications by reporting issuers when in registration, it also should be observed by non-reporting issuers preparing to offer securities to the public for the first time. A non-reporting issuer that has established a history of ordinary course business communications through its web site should be able to continue to provide business and financial information on its site consistent with our original guidance. A non-reporting issuer preparing for its first registered public offering that contemporaneously establishes a web site, however, may need to apply this guidance more strictly when evaluating its web site content because it may not have established a history of ordinary-course business communications with the marketplace. Thus, its web site content may condition the market for the offering and, due to the unfamiliarity of the marketplace with the issuer or its business, investors may be unable to view the issuer's communications in an appropriate context while the issuer is in registration. In other words, investors may be less able to distinguish offers to sell an issuer's securities in a registered offering from product or service promotional activities or other business or financial information.

Increasingly, issuers and broker-dealers are conducting public securities offerings online, using the Internet, electronic mail and other electronic media to solicit prospective investors. Examples of these electronic communications include investor questionnaires on investment qualifications, broker-dealer account-opening procedures and directives on how to submit indications of interest or offers to buy in the context of a specific public offering. 69 These developments present both potential benefits and dangers to investors. 70 On the positive side, numerous “online brokers” appear to have begun to give individual investors more access to public offerings, including initial public offerings, or IPOs. 71 Still, dangers accompany these expanded online investment opportunities. Retail investors often are unfamiliar with the public offering process generally, and, in particular, with new marketing practices that have evolved in connection with online public offerings. We are concerned that there may be insufficient information available to investors to enable them to understand fully the online public offering process. We also are concerned that investors are being solicited to make hasty, and perhaps uninformed, investment decisions. 72

Two fundamental legal principles should guide issuers, underwriters and other offering participants in online public offerings. First, offering participants can neither sell, nor make contracts to sell, a security before effectiveness of the related Securities Act registration statement. 73 A corollary to this principle dictates that “[n]o offer to buy * * * can be accepted and no part of the purchase price can be received until the registration statement has become effective.”  74

Second, until delivery of the final prospectus has been completed, written offers and offers transmitted by radio and television cannot be made outside of a Section 10 prospectus except in connection with business combinations.  75 After filing the registration statement, two limited exceptions provide some flexibility to offering participants to publish notices of the offering. 76 Following effectiveness, offering participants may disseminate sales literature and other writings so long as these materials are accompanied or preceded by a final prospectus. 77 Oral offers, in contrast, are permissible as soon as the registration statement has been filed. Offering participants may use any combination of electronic and more traditional media, such as paper or the telephone, to communicate with prospective investors, provided that use of these media is in compliance with the Securities Act.

These key legal principles must underpin the development of appropriate procedures for online offerings. To date, the Division of Corporation Finance has reviewed numerous procedures in connection with online distributions of IPOs. The Division also has issued a no-action letter regarding permissible procedures for the use of the Internet in IPOs. 78 We understand, however, that a number of online brokers have urged that we make additional regulatory accommodations to facilitate online offerings. We appreciate the benefits that technology brings to the offering process and fully support the need to craft a regulatory system that maximizes these benefits. We also are mindful of our investor protection mandate and the fundamental principles established by the Securities Act for the offer and sale of securities. Many of the procedures urged upon us by online brokers may be properly the subject of regulatory action. Accordingly, in this release, we do not prescribe any specific procedures that must be followed. Instead, we will continue to analyze this area as practice, procedures and technology evolve, with a view to possible regulatory action in the future. Additionally, the Commission staff will continue to review procedures submitted in connection with online offerings.

Broad use of the Internet for exempt securities offerings under Regulation D is problematic because of the requirement that these offerings not involve a general solicitation or advertising. 79 When we first considered whether exempt offerings could be conducted over the Internet, we concluded that an issuer's unrestricted, and therefore publicly available, Internet web site would not be consistent with the restriction on general solicitation and advertising. Specifically, the 1995 Release included an example indicating that an issuer's use of an Internet web site in connection with a purported private offering would constitute a “general solicitation” and therefore disqualify the offering as “private.”  80

Subsequently, the Divisions of Corporation Finance and Market Regulation issued interpretive guidance to a registered broker-dealer and its affiliate, IPONET, 81 that planned to invite previously unknown prospective investors to complete a questionnaire posted on the affiliate's Internet web site “as a means of building a customer base and database of accredited and sophisticated investors” for the broker-dealer. 82 A password-restricted web page permitting access to private offerings would become available to a prospective investor only after the affiliated broker-dealer determined that the investor was “accredited” or “sophisticated” within the meaning of Regulation D. 83 Additionally, a prospective investor could purchase securities only in offerings that were posted on the restricted web site after the investor had been qualified by the affiliated broker-dealer as an accredited or sophisticated investor and had opened an account with the broker-dealer. The Divisions' interpretive letter was based on an important and well-known principle established over a decade ago: a general solicitation is not present when there is a pre-existing, substantive relationship between an issuer, or its broker-dealer, and the offerees. 84

We understand that some entities have engaged in practices that deviate substantially from the facts in the IPONET interpretive letter. Specifically, third-party service providers who are neither registered broker-dealers nor affiliated with registered broker-dealers have established web sites that generally invite prospective investors to qualify as accredited or sophisticated as a prelude to participation, on an access-restricted basis, in limited or private offerings transmitted on those web sites. Moreover, some non-broker-dealer web site operators are not even requiring prospective investors to complete questionnaires providing information needed to form a reasonable belief regarding their accreditation or sophistication. Instead, these web sites permit interested persons to certify themselves as accredited or sophisticated merely by checking a box. These web sites, particularly those allowing for self-accreditation, raise significant concerns as to whether the offerings that they facilitate involve general solicitations. 85 In these instances, one method of ensuring that a general solicitation is not involved is to establish the existence of a “pre-existing, substantive relationship.”  86 Generally, staff interpretations of whether a “pre-existing, substantive relationship” exists have been limited to procedures established by broker-dealers in connection with their customers. This is because traditional broker-dealer relationships require that a broker-dealer deal fairly with, and make suitable recommendations to, customers, and, thus, implies that a substantive relationship exists between the broker-dealer and its customers. We have long stated, however, that the presence or absence of a general solicitation is always dependent on the facts and circumstances of each particular case. 87 Thus, there may be facts and circumstances in which a third party, other than a registered broker-dealer, could establish a “pre-existing, substantive relationship” sufficient to avoid a “general solicitation.”  88

Notwithstanding the analysis for purposes of Section 5 of the Securities Act, web site operators need to consider whether the activities that they are undertaking require them to register as broker-dealers. Section 15 of the Exchange Act  89 essentially makes it unlawful for a broker or dealer “to effect any transactions in, or to induce or attempt to induce the purchase or sale of, any security (other than an exempted security or commercial paper, bankers' acceptances, or commercial bills)” unless the broker or dealer is registered with the Commission. 90 The “exempted securities” for which broker-dealer registration is not required under Section 15 are strictly limited. 91 They do not include, for example, securities issued under Regulations A, D or S  92 or privately placed securities that would be “restricted” securities under Securities Act Rule 144. 93 Thus, broker-dealer registration generally is required to effect transactions in securities that are exempt from registration under the Securities Act. 94 In other words, third-party service providers that act as brokers in connection with securities offerings are required to register as broker-dealers, even when the securities are exempt from registration under the Securities Act. 95

We have noted before that broker-dealers must have adequate facilities and personnel to promptly execute and consummate all of their securities transactions. 96 As broker-dealers increasingly rely on electronic facilities, such as electronic mail and Internet web sites, to handle communications and transactions with their customers, they must have the facilities to handle the expected user volume. 97 Broker-dealers should consider taking steps to maintain their operational capability during high-volume usage (such as when investors transmit electronic indications of interest to purchase securities in online IPOs), and high-volume and high-volatility trading days (such as the immediate aftermarket trading following an IPO). 98

Each technological advance brings changes to the structure of the capital markets and the securities industry. While we believe that the guidance provided in this release will be useful in the near term, we also recognize that we will need to reexamine our regulatory system and interpretive guidance as technology evolves. We will continue to examine and consider the removal of regulations that pose unnecessary barriers to electronic commerce and maintain those regulations that are essential to protect investors. In that regard, we request comment below on specific issues that may arise in the future in several areas. We also solicit comment on whether there are issues involving electronic media under the federal securities laws that we have not identified.

Various commentators have suggested that additional regulatory changes may be warranted in the use of electronic media for delivery purposes. The 1995 Release stated that issuers and market intermediaries with delivery obligations would need to continue to make information available in paper form until such time as electronic media became more universally accessible and accepted. 99 Some believe that this time has come and, therefore, that we should shift from the present delivery model to an “access-equals-delivery” model. Under the latter model, investors would be assumed to have access to the Internet, thereby allowing delivery to be accomplished solely by an issuer posting a document on the issuer's or a third-party's web site.

We believe that the time for an “access-equals-delivery” model has not arrived yet. Internet access is more prevalent than in 1995, but many people in this country still do not enjoy the benefits of ready access to electronic media. 100 Moreover, even investors who are online are unlikely to rely on the Internet as their sole means of obtaining information from issuers or intermediaries with delivery obligations. 101 Some investors decline electronic delivery because they do not wish to review a large document on their computer screens. Others decline electronic delivery because of the time that it takes to download and print a document.

We request comment, however, as to whether there are circumstances in which, consistent with investor protection, an “access-equals-delivery” model might be appropriate. How many U.S. households currently have Internet access? Is there data supporting the conclusion that most investors have access to the Internet? Similarly, is there data supporting the belief that investors who are online will rely on the Internet as their sole means of obtaining information from issuers or intermediaries? Assuming that this data exists, how will investors know when disclosure information has been posted on an issuer's web site? If we were to adopt an “access-equals-delivery” model, would we be creating a system that requires ownership of a late-model, sophisticated computer to participate in the securities markets?

We also request comment on whether the disadvantages of electronic delivery, such as lengthy downloading time and system capacity limitations, are likely to be reduced or eliminated in the near future. Also, will documents delivered online be more readable in the future?

The 1995 and 1996 Releases stated that notice of the availability of electronically delivered disclosure documents must be delivered directly to each investor. The 1995 Release further stated that notice on an Internet web site and otherwise by publication in a newspaper is insufficient to alert a consenting investor of the availability on a web site of a disclosure document. 102

We continue to believe that direct notice of the availability of electronic disclosure documents is necessary unless an issuer or market intermediary can otherwise establish that delivery has been made. For example, a broker-dealer cannot meet its confirmation obligation under Exchange Act Rule 10b-10  103 by simply placing a notice on its web site that a customer must “pull” down to access. Rather, a Rule 10b-10 confirmation must be sent directly to the broker-dealer's customer. Additionally, messages posted to an investor's account at his or her broker-dealer's web site regarding the availability of electronic disclosure documents are insufficient, unless they are promptly forwarded directly to the investor. We request comment, however, as to whether changes in the sophistication and expectations of Internet users as well as advances in Internet technology warrant re-evaluation of our position on whether account messages on an Internet web site provide sufficient notice. Were we to adopt such an approach, would it result in shifting the burden from issuers to notify security holders of the availability of electronic disclosure documents to security holders to search for material information? Would a burden shift be consistent with our investor protection mandate?

In lieu of “access-equals-delivery,” some commentators have argued for changes to our electronic delivery scheme, particularly with respect to investor consent to electronic delivery. We understand that obtaining investor consent poses the most significant barrier to the use of electronic delivery by issuers and market intermediaries. 104 Some have suggested that electronic delivery would be more common if issuers and intermediaries with delivery obligations were permitted to use a form of implied consent to evidence satisfaction of delivery. Under an implied consent model, an issuer could rely on electronic delivery if investors do not affirmatively object when notified of the issuer's or intermediary's intention to deliver documents in an electronic format. Proponents of implied consent argue that the difficulties in obtaining investors' consents to electronic delivery result not from the unwillingness of investors to use an electronic medium, but rather from investors' inattention to requests for affirmative consent.

We are concerned that investors would be significantly and adversely affected by implied consent through their inadvertent failure to object. We understand that in many circumstances investors are not inattentive to requests for consent to electronic delivery, but rather, purposely do not consent. 105 Thus, we generally believe that it would not be appropriate for issuers or intermediaries to rely on implied consent. 106 We request comment, however, as to whether there are particular circumstances under which an implied consent model would be appropriate. 107 For example, would it be appropriate where investors previously have provided an electronic mail address to an issuer or intermediary and have indicated that electronic mail is one of their methods of communication for investing purposes? How would the fact that investors sometimes change their electronic mail addresses affect an implied consent model?

The 1995 Release stated that, as a matter of policy, issuers and market intermediaries with delivery obligations would need to continue to deliver paper copies of documents that are required to be delivered until such time as electronic media becomes more universally accessible and accepted. 108 This policy, however, does not preclude “electronic-only” offerings. In an “electronic-only” offering, investors are permitted to participate only if they agree to accept electronic delivery of all documents in connection with the offering. The 1995 Release provided that an issuer could structure its offering as one that would be effected entirely through electronic media. 109 Even in these offerings, however, an issuer or intermediary must provide the required documents in paper form if an investor revokes his or her consent before valid delivery is made. Additionally, the 1995 and 1996 Releases both provided that a paper copy of information previously delivered electronically should be delivered whenever an investor so requests, even when the revocation is made after electronic delivery or there has been no revocation at all. 110

Should the paper back-up system be required for offerings where participation is conditioned upon consent to electronic-only delivery?  111 If not, would there be any adverse effects? Would we be creating a two-tiered system with access to some offerings available only to investors with Internet access? Should an issuer be permitted to require investors to pay for paper delivery when they have consented to electronic-only delivery? If the paper back-up system were no longer required, how should investors be advised of any payment requirement and any attendant risks? In the event of technical difficulties, how would issuers and intermediaries comply with their delivery obligations, other than by providing paper delivery? Should there be an exception to paper delivery where technological difficulties would prevent electronic delivery in a timely manner? What disclosures should be included in the notice to investors? If the paper back-up system were no longer required generally, are there any particular types of offerings, such as dividend reinvestment and direct stock purchase plans, or DRSPPs, where the paper back-up system should be retained?

If the paper back-up system were no longer required for public offerings, how would issuers meet their prospectus delivery requirements for secondary market trading?  112 Should an issuer be permitted to condition participation in offerings upon consent to electronic delivery of all required Exchange Act reports? If not, should an issuer be required to obtain a separate consent from security holders in the newly public issuer in order to permit electronic-only delivery of required Exchange Act reports?

For a mutual fund, would there be any potential adverse effects of limiting electronic-only offerings to investors who provide an irrevocable consent to electronic delivery of all future disclosure documents, including shareholder reports, proxy solicitation materials and prospectuses provided in connection with the purchase of additional fund shares?

One of the unique characteristics of the Internet is the continuous availability of information once it is posted on a web site. For example, a press release disseminated over a wire service or through other customary means is considered to have been “issued” once, and thereafter is not recirculated to the marketplace. The same press release posted on an issuer's web site potentially has a longer life because it provides a record that can be accessed by investors at any time and upon which investors potentially could rely when making an investment decision without independent verification. In effect, a statement may be considered to be “republished” each time that it is accessed by an investor or, for that matter, each day that it appears on the web site.

Commentators have suggested that if a statement is deemed to be republished, it may potentially give rise to liability under Section 10(b) of the Exchange Act and Rule 10b-5. 113 We request comment on how to facilitate the availability of historical information on the Internet consistent with the federal securities laws. Additionally, how can technology help minimize investor confusion while providing for the accessibility of potentially useful information?

Although we believe that our long-standing guidance on permissible communications is adequate to address many of the questions applicable to an issuer's web site content when in registration, we recognize that the Internet has spawned new types of businesses that do not easily fit within the existing disclosure framework. For example, many issuers not only use their web sites to conduct business through the Internet, their web sites are their businesses. In this instance, when an issuer is in registration, how should the issuer segregate its business activities from its offering activities? In other words, how can an issuer comply with its obligations under Section 5 of the Securities Act while maintaining communications to the marketplace related solely to its legitimate business activities?

Are there special considerations for mutual funds because they continuously offer and sell their shares to the public and, therefore, always maintain effective registration statements? For a mutual fund that continuously offers its shares, what, if any, facts and circumstances should overcome the strong inference  114 that hyperlinked information on a third-party web site that meets the definition of an “offer to sell,” “offer for sale” or “offer” under Section 2(a)(3) of the Securities Act is attributable to an issuer for purposes of anti-fraud liability?

Another distinguishing characteristic of the Internet is its facility for interactive discussion. This discussion can, and does, cover virtually any subject, including issuers and their securities. In the corporate context, at least three different means of Internet “discussions” have evolved. First, many web sites offer moderated discussion forums, typically led by a real-time moderator and featuring a guest “expert.” Other web sites contain “bulletin boards,” cyberspace message centers where comments concerning issuers, securities or industries can be posted and saved for viewing over an extended period of time. Finally, numerous web sites host discussion groups, or “chat rooms,” with real-time postings and viewing by participants on a wide variety of topics.

These discussion forums present unique and often difficult problems for issuers. 115 We request comment on any issues relating to Internet discussion forums. In particular, what effect, if any, do discussion group communications have on an issuer's stock price? In addition, should issuers or broker-dealers that host online discussion forums adopt and maintain “best practices” for participation in these forums? If so, who should establish these best practices, and what should be included in them?

Another area of significant concern involves the use of Internet discussion forums by an issuer's employees. Are issuers currently using specific procedures covering the use of electronic forms of communications by their employees? If so, what are these “best practices”?

A series of examples is provided below to illustrate various applications of the interpretations outlined in this release and to provide guidance in applying them to specific facts and circumstances. We note, however, that these examples are non-exclusive methods of ways to comply with the above interpretations. Additionally, the analysis required to determine compliance with the federal securities laws is fact-specific, and any different or additional facts might require a different conclusion. We request comment on whether other examples might be appropriate for publication.

(1) Investor John Doe gives XYZ Delivery Service his informed consent over the telephone using automated touch tone instructions (after accessing the service using a personal identification number). 116 The automated instructions informed John Doe of the manner, costs and risks of electronic delivery. The consent related to electronic delivery of documents. Before delivering any electronic documents to Investor John Doe, XYZ Delivery Service sends Investor John Doe a letter confirming that he had consented to electronic delivery.

The confirming letter sent by XYZ Delivery Service provides assurance that John Doe consented to the same extent as if he had provided a written or electronic consent. Thus, XYZ Delivery Service's procedures would evidence satisfaction of delivery. We also note that XYZ Delivery Service has reason to be assured of the authenticity of John Doe's telephonic consent because of his use of a personal identification number.

(2) In speaking with Broker DEF over the telephone, Investor Jane Doe (a long-term customer of Broker DEF) consents to electronic delivery to all future documents of Company XYZ on Company XYZ's Internet web site. Broker DEF agrees to notify Jane Doe by electronic mail (or other acceptable means of notification) that Company XYZ has posted the documents on its web site when the posting occurs. Before obtaining Jane Doe's consent, Broker DEF advises Jane Doe that she may incur certain costs associated with delivery in this manner (for example, online time and printing) and possible risks (for example, system outages). Broker DEF also advises Jane Doe that the term of the consent is indefinite but that the consent can be revoked at any time. Broker DEF maintains a signed and dated memorandum in its files regarding the details of the conversation.

In this situation, Jane Doe's consent would be informed regarding the manner, costs and risks of electronic delivery. We also note that Broker DEF has reason to be assured of the authenticity of Jane Doe's telephonic consent because Jane Doe is well known to Broker DEF.

(3) In seeking a global consent to electronic delivery from Investor John Doe, Broker DEF specifies that the electronic media that may be used to deliver documents will be CD-ROM, an Internet web site, electronic mail or facsimile transmission, and further advises John Doe that if he does not have access to all of these media he should not consent to electronic delivery. John Doe consents to electronic delivery from Broker DEF.

In this situation, John Doe's consent would be informed regarding the manner of electronic delivery. The consent need not specify which form of media a specific issuer may use.

(4) Investor Jane Doe consents to delivery via a third-party delivery service's Internet web site of all future documents of Company ABC, Company XYZ and any additional companies in which she invests in the future. Jane Doe subsequently purchases securities of Company DEF. Thereafter, Company XYZ and Company DEF post their final prospectuses on the third-party web site and notify Jane Doe by electronic mail (or other acceptable means of notification) of the availability of the prospectuses. Company ABC does not post its prospectus on the third-party web site but delivers a CD-ROM version of its prospectus.

Company XYZ has satisfied its delivery obligations. Additionally, although not specifically identified in the consent, Company DEF has satisfied its delivery obligations because the consent covered delivery by companies added at a later date. Absent other factors indicating that Jane Doe actually accessed Company ABC's CD-ROM prospectus, however, Company ABC's procedure would not satisfy its delivery obligations because Jane Doe consented to delivery only by an Internet web site. If consent is to be relied upon, the consent must cover the specific electronic medium or media that may be used for delivery.

(5) Investor John Doe consents to delivery of all future documents of Company XYZ electronically via Company XYZ's Internet web site, including documents delivered in PDF. The form of consent advises John Doe of the system requirements necessary for receipt of documents in PDF and cautions that downloading time may be slow. Company XYZ places its proxy soliciting materials and annual report to security holders in PDF on its Internet web site, with a hyperlink on the same screen enabling users to download a free copy of Adobe Acrobat (software permitting PDF viewing) and a toll-free telephone number that investors can use to contact someone during Company XYZ's business hours for technical assistance or to request a paper copy of a document.

Company XYZ has satisfied its delivery obligations. Under these circumstances, John Doe can effectively access the information provided.

(6) Company XYZ, which is engaged in a public offering of its securities, places its preliminary prospectus on its Internet web site. In the Business section of the prospectus, Company XYZ has placed a hyperlink to a report by a marketing research firm located on a third-party web site regarding Company XYZ's industry.

Because the hyperlink is embedded within the prospectus, the report becomes a part of the prospectus and must be filed with the Commission. In addition, Company XYZ must obtain a written consent from the person preparing the report in accordance with Securities Act Rule 436, 17 CFR 230.436. This consent also must be filed with the Commission. Moreover, the report will be subject to liability under Section 11 of the Securities Act, as well as other anti-fraud provisions of the federal securities laws.

(7) Company XYZ, which is engaged in a public offering of its securities, places its preliminary prospectus on its Internet web site. Each of the topics in the Table of Contents is a hyperlink, allowing investors to pick a topic and immediately be hyperlinked to the section in the prospectus relating to that topic.

The hyperlinks present no federal securities law issues. The hyperlinks do no more than allow investors to turn electronically to a specific page in the prospectus.

(8) Company XYZ, which is engaged in a public offering of its securities, places its preliminary prospectus on its Internet web site. Immediately following the button for the prospectus on the web site, Company XYZ offers investors the ability to download its financial statements in spreadsheet format. This financial information is not modified in any way from that contained in the filed document.

The provision of financial statements in spreadsheet format would be permissible when the download results only in a mere difference in format without any difference in text. The completeness of the financial statements must not be compromised by any difference in the electronic version from the paper version.

We invite anyone who is interested to submit written comments on this release. We request comment not only on the specific issues discussed in this release, but also on any other approaches or issues involved in facilitating the use of electronic media to further the disclosure purposes of the federal securities laws. We request comment from the point of view of both parties providing the disclosure, such as issuers and those acting on behalf of issuers, and parties receiving and using the disclosure, such as investors and security holders.

You may be affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected categories and entities may include, but are not limited to:

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in the table could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether or not this action might apply to certain entities. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

1. Electronically . You may obtain electronic copies of this document, and certain other related documents that might be available electronically, from the EPA Internet Home Page at http://www.epa.gov/. To access this document, on the Home Page select “Laws and Regulations” and then look up the entry for this document under the “ Federal Register —Environmental Documents.” You can also go directly to the Federal Register listings at http://www.epa.gov/fedrgstr/.

2. In person . The Agency has established an official record for this action under docket control number OPP-300913A. The official record consists of the documents specifically referenced in this action, and other information related to this action, including any information claimed as Confidential Business Information (CBI). This official record includes the documents that are physically located in the docket, as well as the documents that are referenced in those documents. The public version of the official record does not include any information claimed as CBI. The public version of the official record, which includes printed, paper versions of any electronic comments submitted during an applicable comment period is available for inspection in the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA, from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305-5805.

In the Federal Register of September 15, 1999 (64 FR 50043) (FRL-6098-7), EPA issued a proposed rule which announced that Novartis Crop Protection, Inc., 410 Swing Road, Greensboro, NC 27419 and the Interregional Research Project (IR-4) had submitted pesticide petitions (PP) 5E4450, 5F4574, 6F4613, 5F4546, 6F3332, and 7E4905 pursuant to section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a as amended by the Food Quality Protection Act of 1996 (FQPA) (Public Law 104-170) proposing that 40 CFR part 180 be amended by establishing a tolerance for cyromazine in or on mango at 0.3 parts per million (ppm); onion, green at 2.0 ppm; onions, dry bulb at 0.1 ppm; potato at 0.8 ppm; corn, sweet, (kernels plus cob with husks removed) at 0.5 ppm; corn, sweet, forage at 0.5 ppm; corn, sweet, stover at 0.5 ppm; radishes, root at 0.5 ppm; radishes, tops at 0.5 ppm; lima beans at 1.0 ppm; cotton, undelinted seed at 0.1 ppm; milk at 0.05 ppm; and meat, fat and meat byproducts (of cattle, goat, hogs, horses and sheep) at 0.05 ppm. EPA received one comment from a private citizen of Australia alleging that the poor health of a dog was due to cyromazine and stating that long-term implications and studies had not been addressed in this petition. In particular the citizen stated:

EPA responses to these comments follows:

The cyromazine data base contains all required studies, this includes (sometimes with several studies for each study category):

All the required acute, short-term and long-term studies have been conducted. The Agency has assessed the long-term human health effects from exposure to cyromazine. The available dog studies only indicate effects on the hematological parameters (hematocrit and hemoglobin levels); there was an increase in liver weight in the 13-week study, but this was not seen in any other species. There was no indication of effects in the dog on the liver (other than weight, a normal physiological response to metabolism of the compound, no supportive histopathology was noted), kidneys, or on the immune system. The Agency notes that “Decaflea” product administered to the dog also contained 200 milligrams/tablet of diethylcarbamazine citrate, an ethyl carbamate and heartworm animal drug. If the health effects seen in the dog were treatment-related, the presence of this compound should also have been investigated as a possible cause.

In regards to the two open literature studies cited, the Agency notes that the first open literature study is an Egyptian study in chickens looking at liver function. The results indicate that the liver was functioning normally to detoxify the administered compound.

The second study was in turkeys intended to assess the effects on reproduction. This study utilized extremely high doses (up to 2 grams per kilogram diet). These are doses that exceeded even our limit doses. Since the turkey is one of the treated species for fly control, this study was not an evaluation of the reproductive effects, but rather a true toxicity study (producing adverse effects) as opposed to hazard studies used by EPA to evaluate potential hazards to humans. The investigators had to reduce one dose due to palatability problems (the turkeys would not eat the treated diet). The kidney effects were due to an overburdening of the organ from the extremely high doses. The Agency conducted open literature searches to determine if there was any report of adverse effects not reported previously and no additional information was found.

As stated previously and as indicated in the September 15, 1999 Federal Register proposal for cyromazine, the Agency has sufficient data to assess the short- and long-term hazards of cyromazine with special consideration to the sensitivity of infants and children from exposure to cyromazine as required by the FQPA.

The petitions requested that 40 CFR 180.414 be amended by establishing a tolerance for residues of the insecticide cyromazine, in or on mango at 0.3 parts per million (ppm); onion, green at 2.0 ppm; onions, dry bulb at 0.1 ppm; potato at 0.8 ppm; corn, sweet, (kernels plus cob with husks removed) at 0.5 ppm; corn, sweet, forage at 0.5 ppm; corn, sweet, stover at 0.5 ppm; radishes, root at 0.5 ppm; radishes, tops at 0.5 ppm; lima beans at 1.0 ppm; cotton, undelinted seed at 0.1 ppm; milk at 0.05 ppm; and meat, fat and meat byproducts (of cattle, goat, hogs, horses and sheep at 0.05 ppm. Based on the risk assessments discussed in the proposed rule and the findings made therein, the Agency concludes that there is a reasonable certainty that no harm will result to the U.S. population and to infants and children from aggregate exposure to residues of cyromazine. Therefore, tolerances are established as set forth below.

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA of 1996, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d), as was provided in the old FFDCA sections 408 and 409. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket control number OPP-300913A in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before July 3, 2000.

1. Filing the request . Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.

Mail your written request to: Office of the Hearing Clerk (1900), Environmental Protection Agency, Ariel Rios Bldg., 1200 Pennsylvania Ave., NW., Washington, DC 20460. You may also deliver your request to the Office of the Hearing Clerk in Rm. C400, Waterside Mall, 401 M St., SW., Washington, DC 20460. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (202) 260-4865.

2. Tolerance fee payment . If you file an objection or request a hearing, you must also pay the fee prescribed by 40 CFR 180.33(i) or request a waiver of that fee pursuant to 40 CFR 180.33(m). You must mail the fee to: EPA Headquarters Accounting Operations Branch, Office of Pesticide Programs, P.O. Box 360277M, Pittsburgh, PA 15251. Please identify the fee submission by labeling it “Tolerance Petition Fees.”

EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, Ariel Rios Bldg., 1200 Pennsylvania Ave., NW., Washington, DC 20460.

If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, Ariel Rios Bldg., 1200 Pennsylvania Ave., NW., Washington, DC 20460.

3. Copies for the Docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VI.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I.B.2. Mail your copies, identified by docket control number OPP-300913A, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, Ariel Rios Bldg., 1200 Pennsylvania Ave., NW., Washington, DC 20460. In person or by courier, bring a copy to the location of the PIRIB described in Unit I.B.2. You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 file format or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).

This final rule establishes a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. , or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any prior consultation as specified by Executive Order 13084, entitled Consultation and Coordination with Indian Tribal Governments (63 FR 27655, May 19, 1998); special considerations as required by Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or require OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of this final rule in the Federal Register . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

You may be affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected categories and entities may include, but are not limited to:

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in the table could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether or not this action might apply to certain entities. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

1. Electronically . You may obtain electronic copies of this document, and certain other related documents that might be available electronically, from the EPA Internet Home Page at http://www.epa.gov/. To access this document, on the Home Page select “Laws and Regulations” and then look up the entry for this document under the “ Federal Register —Environmental Documents.” You can also go directly to the Federal Register listings at http://www.epa.gov/fedrgstr/.

2. In person . The Agency has established an official record for this action under docket control number OPP-300995. The official record consists of the documents specifically referenced in this action, and other information related to this action, including any information claimed as Confidential Business Information (CBI). This official record includes the documents that are physically located in the docket, as well as the documents that are referenced in those documents. The public version of the official record does not include any information claimed as CBI. The public version of the official record, which includes printed, paper versions of any electronic comments submitted during an applicable comment period is available for inspection in the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2 1921 Jefferson Davis Hwy., Arlington, VA, from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305-5805.

In the Federal Register of March 17, 1999 (64 FR 113106) (FRL-6064-6), EPA issued a final rule pursuant to section 408(b)(2)(A)(i) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a as amended by the Food Quality Protection Act of 1996 (FQPA) (Public Law 104-170) announcing the establishment of tolerances for azoxystrobin and its Z isomer on several commodities, including pistachios at 0.01 ppm and tree nuts at 0.01 ppm, as had been proposed by Zeneca Ag Products, 1800 Concord Pike, Wilmington, DE 19897 in tolerance petition number 7F4864. This final rule included a detailed discussion of the risk assessment and of residue and other considerations that lay behind EPA's decision to establish the tolerances. Telephone comments were received from two parties in California immediately after publication of the rule. In both cases, the parties believed that the pistachio and tree nuts tolerances were too low, considering the data submitted in support of the tolerances and the use directions on the label, and might lead to adulterated commodities even when the use directions on the label were accurately followed. EPA agreed to revisit the tolerances assigned to these commodities. If the commenter's comments were substantiated, a reassessment of the risk from the use of azoxystrobin would also be necessary. The Agency has concluded that the commenters' concerns are justified and that the appropriate tolerances for these commodities are 0.02 ppm in or on pistachios and 0.02 ppm in or on tree nuts. There was a negligible increase in the risk calculated for the use of azoxystrobin as a result of the increases in these two tolerances. Therefore, in the Federal Register of January 5, 2000 (65 FR 425) (FRL-6393-1), a proposed rule was issued, pursuant to section 408(b)(2)(A)(ii) of the FFDCA as amended by the FQPA, announcing the Agency's intention to increase the tolerances for azoxystrobin and its Z isomer in or on pistachio nuts to 0.02 ppm and in or on tree nuts to 0.02 ppm. There were no comments received in response to the proposed rule.

The proposed rule requested that 40 CFR 180.507 be amended by increasing the tolerances of the fungicide, azoxystrobin and its Z isomer, in or on pistachio nuts to 0.02 ppm and in or on tree nuts to 0.02 ppm.

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish or leave in effect a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue.”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances November 26, 1997 (62 FR 62961) (FRL-5754-7).

Consistent with section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure, consistent with section 408(b)(2), for a tolerance for azoxystrobin and its Z isomer in or on pistachios at 0.02 parts per million (ppm) and in or on tree nuts at 0.02 ppm. EPA's assessment of the dietary exposures and risks associated with increasing the subject tolerances for azoxystrobin and its Z isomer from 0.01 ppm to 0.02 ppm was performed in essentially exactly the same way as was the azoxystrobin risk assessment contained in the azoxystrobin final rule that was published in the Federal Register of March 17, 1999, except that where tolerance-level residues were used in the analyses, in the first analysis a tolerance value for azoxystrobin and its Z isomer of 0.01 ppm was used for pistachios and the same value was used for tree nuts, while in the second analysis, a tolerance value for azoxystrobin and its Z isomer of 0.02 ppm was used for pistachios and a tolerance value for azoxystrobin and its Z isomer of 0.02 ppm was used for tree nuts. The exposure/risk reassessment lead to no change in the toxicological profile or toxicological endpoints compared to those in the azoxystrobin final rule published on March 17, 1999. The increases in the exposure and risk estimates in the second analysis, compared to those presented in the first analysis, were so small (generally at the fourth decimal place) that the risk assessment values (rounded) that are reported in the March 17, 1999 final rule were not changed. Stated another way, the risk increase resulting from this final rule will be negligible.

No change in the discussions of metabolism in plants and animals, analytical enforcement methodology, magnitude of residues, and international residue limits, compared to the discussions of those topics in the final rule dated March 17, 1999, that established azoxystrobin tolerances on a number of commodities, including pistachios and tree nuts, is needed.

Therefore, tolerances for the residues of azoxystrobin and its Z isomer in or on pistachios are increased from 0.01 ppm to 0.02 ppm and in or on tree nuts are increased from 0.01 ppm to 0.02 ppm.

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA of 1996, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d), as was provided in the old FFDCA sections 408 and 409. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket control number OPP-300995 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before July 3, 2000.

1. Filing the request . Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.

Mail your written request to: Office of the Hearing Clerk (1900), Environmental Protection Agency, Ariel Rios Bldg., 1200 Pennsylvania Ave., NW., Washington, DC 20460. You may also deliver your request to the Office of the Hearing Clerk in Rm. M3708, Waterside Mall, 401 M St., SW., Washington, DC 20460. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (202) 260-4865.

2. Tolerance fee payment . If you file an objection or request a hearing, you must also pay the fee prescribed by 40 CFR 180.33(i) or request a waiver of that fee pursuant to 40 CFR 180.33(m). You must mail the fee to: EPA Headquarters Accounting Operations Branch, Office of Pesticide Programs, P.O. Box 360277M, Pittsburgh, PA 15251. Please identify the fee submission by labeling it “Tolerance Petition Fees.”

EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, Ariel Rios Bldg., 1200 Pennsylvania Ave., NW., Washington, DC 20460.

If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, Ariel Rios Bldg., 1200 Pennsylvania Ave., NW., Washington, DC 20460.

3. Copies for the Docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VI.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I.B.2. Mail your copies, identified by docket control number OPP-300995, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, Ariel Rios Bldg., 1200 Pennsylvania Ave., NW., Washington, DC 20460. In person or by courier, bring a copy to the location of the PIRIB described in Unit I.B.2. You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 file format or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).

This final rule increases two tolerances under FFDCA section 408(d) in response to comments received following publication of a final rule that was itself a response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. , or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any prior consultation as specified by Executive Order 13084, entitled Consultation and Coordination with Indian Tribal Governments (63 FR 27655, May 19, 1998); special considerations as required by Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994), or require OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of this final rule in the Federal Register . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

This is a summary of the Commission's Twenty-First Order on Reconsideration in CC Docket No. 96-45, and Memorandum Opinion and Order in CC Docket Nos. 96-45, 97-21, and 98-171; FCC 00-118, released on April 11, 2000. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 Twelfth Street, SW, Washington, DC 20554.

1. Several parties have challenged the Commission's decision to include in the universal service contribution base those charges identified by carriers on end-user bills as recovering state or federal universal service contributions. As described, these challenges are pending before the Commission at various procedural stages. Because all of the challenges concern the same issue, we address them together in this order. For the reasons that follow, we deny the parties' challenges.

2. The Commission's rules provide that contributions to the universal service support mechanisms shall be based on “revenues derived from domestic end users for telecommunications or telecommunications services.” The parties claim that charges assessed on end users to recover a carrier's contributions to state or federal universal service support mechanisms do not qualify as revenues derived from telecommunications or telecommunications services. Thus, the parties assert that Line 48 on the 1998 Universal Service Worksheet (FCC Form 457), which treats universal service charges as telecommunications revenues, constitutes a new substantive rule. Based on the assertion that Line 48 is a new substantive rule, the parties further allege that APD committed two procedural violations in adding Line 48 to the 1998 Worksheet. First, the parties claim that APD exceeded the authority delegated to the Bureau by adopting a new substantive rule, which is a task reserved to the Commission in Part 1, Subpart C, of the Commission's rules. Second, the parties allege that APD violated section 553 of the Administrative Procedure Act (APA) by adopting a new substantive rule without an opportunity for notice and comment. We disagree.

3. The parties have erred in their underlying assertion that Line 48 constitutes a new substantive rule. In the First Report and Order, 62 FR 32862 (June 17, 1997), released on May 8, 1997, the Commission decided to assess contributions to the universal service support mechanisms on telecommunications revenues that carriers derive from end users. The Commission permitted carriers to recover their universal service contributions from their customers and “to specify that fact on customers' bills,” e.g., through a line-item charge. The Commission codified the contribution requirement at § 54.709(a)(1) of its rules, which states that contributions to the universal service support mechanisms shall be based on “revenues derived from domestic end users for telecommunications or telecommunications services.” The 1996 Act defines telecommunications as “the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information sent and received.” The 1996 Act also defines telecommunications services as “the offering of telecommunications for a fee directly to the public * * *.” The charge assessed on an end-user to recover a carrier's contributions to state or federal universal service support mechanisms is simply one part of the carrier's fee for the provision of telecommunications to that end-user. Although a carrier may choose to assess a particular cost of providing telecommunications or telecommunications services separately from other such costs, the carrier's choice does not change the nature of the revenues received from the end-user. Thus, carrier-imposed universal service charges are, and always have been, revenues derived from the provision of telecommunications. As such, carrier-imposed universal service charges are part of the universal service contributions base.

4. Moreover, we believe that the parties misapprehend the nature of carrier-imposed universal service charges. Instead of forcing carriers to recover their universal service contributions through a mandatory surcharge on their customers, the Commission gave carriers the flexibility to decide whether, how, and how much to recover from their customers. For example, carriers may recover their universal service contributions by raising their rates or by adding a separate line-item universal service charge to their customers' bills. In either event, the carrier is recovering its contribution from its end-users. Merely because the Commission allowed carriers to identify a portion of their fees as recovering the carriers' universal service contributions, the monies so collected are not somehow rendered non-telecommunications revenues. Indeed, but for the provision of telecommunications to its customers, a carrier would not have a telecommunications revenues, would not be required to contribute to the universal service support mechanisms, and would not have any lawful basis to assess a universal service charge on its customers.

5. Because carrier-imposed universal service charges are end-user telecommunications revenues, the addition of Line 48 on the 1998 Worksheet does not constitute a new substantive rule. Rather, Line 48 is merely the Bureau's implementation and clarification of the existing Commission rule requiring that contributions be based on end-user telecommunications revenues. Because Line 48 is not a new substantive rule, the Bureau neither exceeded its delegated authority nor violated the notice and comment requirements of the APA. Accordingly, we reject the parties' procedural claims.

6. The parties argue that including carrier-imposed universal service charges in the contribution base creates a circular formula that drives up the contribution base, causing increased contributions, which result in higher carrier-imposed universal service charges that further drive up the contribution base. Thus, the parties claim that the inclusion of carrier-imposed universal service charges in the contribution base disserves the public interest because it results in an upwardly spiraling “vicious cycle” of perpetual increases in carrier contributions to the universal service support mechanisms. For example, PCIA supplies the following descriptions of this alleged effect:

Metrocall and Blooston provide similar examples. Upon closer examination, however, the inclusion of carrier-imposed universal service charges in the contribution base does not have the effect claimed by the parties.

7. In each of their examples, the parties assume that, all other things being equal, the contribution factor remains constant as the contribution base increases. This assumption, however, is mathematically impossible. The contribution factor is the ratio of total universal service program costs to the contribution base. Stated as a mathematical equation, the contribution factor can be described as follows:

The total program costs and the contribution base are independent variables in this equation. The contribution factor, on the other hand, is the dependent variable, i.e., the contribution factor is dependent on the amount of the total program costs and the contribution base. Because the contribution base is the denominator in this equation, the contribution factor is inversely proportional to the contribution base. In other words, as the contribution base increases, all other things being equal,the contribution factor must decrease.

8. As demonstrated by the exhibit, all other things being equal, when carrier-imposed universal service charges are included in the contribution base, the contribution base increases, the contribution factor decreases in proportion to the increase in the contribution base, and the amount of each carrier's contribution remains constant. Therefore, the parties' “vicious cycle” argument is unfounded. Moreover, if carrier-imposed universal service charges were not included in the contribution base, there would be a competitive imbalance in the Commission's contribution methodology. All other things being equal, a carrier that chose to recover its contributions by increasing its rates would have an increased individual contribution base and an increased contribution. A carrier that chose to recover its contributions by imposing a line-item charge would not have an increased individual contribution base or an increased contribution. Such a result would put carriers choosing to raise their rates at a disadvantage compared to carriers choosing to impose a line-item charge, would render illusory the “choice” of recovery methods, and would violate the universal service principle of competitive neutrality. Accordingly, for all of the foregoing reasons, we reject the parties' claims that carrier-imposed universal service charges should be excluded from the contribution base.

9. The authority contained in sections 1-4, 201-205, 218-220, 254, 303(r), 403, and 405 of the Communications Act of 1934, as amended, and section 1.429 of the Commission's rules, Twenty-First Order on Reconsideration in CC Docket No. 96-45 and the Memorandum Opinion and order in CC Docket Nos. 96-45, 97-21, and 98-171 are adopted.

10. The authority contained in sections 4(i) and 405 of the Communications Act of 1934, as amended, and section 1.429 of the Commission's rules, the Petition for Partial Reconsideration and Clarification filed by the Personal Communications Industry Association on July 17, 1997 is denied to the extent stated.

11. The authority contained in sections 4(i) and 405 of the Communications Act of 1934, as amended, and section 1.106 of the Commission's rules, the Petition for Reconsideration filed by the Personal Communications Industry Association on August 31, 1998 is denied.

12. The authority contained in sections 4(i) and 405 of the Communications Act of 1934, as amended, and section 1.106 of the Commission's rules, the Petition for Reconsideration filed by Metrocall, Inc. on August 31, 1998 is denied.

This is a synopsis of the Commission's Memorandum Opinion and Order, MM Docket No. 98-175, adopted April 6, 2000, and released April 19, 2000. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Center (Room 239), 445 12th Street, SW, Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, International Transcription Services, Inc., (202) 857-3800, 1231 20th Street, NW, Washington, DC 20036.

Before us is an Application for Review of the Report and Order which amended the Television Table of Allotments for Buffalo, New York at the request of Western New York Public Broadcasting Association (“WNYPBA”), licensee of Stations WNED-TV, Channel 17, and WNEQ-TV, Channel *23, Buffalo, New York, to reflect Channel 17 as reserved for noncommercial educational use, and Channel 23 as nonreserved, and related changes to the DTV Table of Allotments. Coalition for Noncommercial Media (“CNM”), a group of Buffalo-Area citizens and WNED/WNEQ-TV viewers filed this Application for Review, alleging that the Mass Media Bureau erred in making these amendments.

The Report and Order granting the change of reservation considered and rejected arguments opposing WNYPBA's request by Grant Television, Inc. licensee of WNYO-TV, Buffalo, New York, WKBW-TV Licensee, Inc., licensee of Station WKBW-TV, Buffalo, New York, Kevin Smardz, President of Southtowns Christian Center, Lakeview, New York, and CNM. The Report and Order also denied CNM's counterproposal requesting that the Commission amend the TV Table of Allotments to reserve all unreserved channels being used for noncommercial operation on the grounds that it was not mutually exclusive with the WNYPBA proposal.

The Report and Order held (1) that the exchange of reservation would serve the public interest, and (2) that it could be effectuated under the Commission's existing rules and policies. The Bureau noted the transaction would serve the public interest because there would be no diminution in noncommercial educational service in Buffalo and that such service would actually expand because Station WNED-TV, clearly the more powerful and broad reaching of the two stations would be on a reserved channel. It also noted that WNYPBA could sell Station WNED-TV, arguably the more valuable and marketable station, on unreserved Channel 17 as a commercial entity at any time, but that it had foregone this opportunity in order to retain noncommercial educational service on Station WNED-TV on Channel *17.

The Bureau also pointed out that under the Commission's rules allowing intraband channel swaps between commercial and noncommercial stations, WNYPBA, after selling Station WNED-TV, could have then swapped channels with WNED-TV's new licensee and reached the same result as its proposed reservation exchange, and that avoiding this two-stage filing would also serve the public interest.

The Bureau also addressed CNM's “counterproposal,” which had two aspects: One requesting that we reserve Channel 17 at Buffalo, and one requesting that we reserve all unreserved channels of stations which were being operated noncommercially. The Bureau considered CNM's counterproposal as not appropriately filed in this proceeding because CNM's request to reserve all unreserved channels of stations being operated as noncommercial stations was not mutually exclusive with WNYPBA's proposal at Buffalo.

CNM argues again that the Bureau should have denied WNYPBA's request for the channel reservation swap. CNM goes on to argue that the Bureau failed to consider its “counterproposal.” It then repeats all of the arguments it made in its comments before the Bureau. CNM's Petition for Emergency Relief, supported by CIPB, requests that the Commission stay the effect of the Report and Order, and prevent WNYPBA from converting Station WNEQ-TV (or WNED-TV) to commercial operation until the resolution of its proposal to reserve Channel 17 in this matter.

As a preliminary matter, we will note that CNM's Petition for Emergency Relief is moot and will be dismissed. Furthermore, we will not address CNM's repeated arguments against the reservation swap. The Bureau properly addressed CNM's arguments in the Report and Order and we will not disturb its decision. However, we will address CNM's argument that the Bureau overlooked the first aspect of CNM's “counterproposal,” to reserve Channel 17 at Buffalo. CNM argues that pursuant to the holding of Ashbacker v. F.C.C. (“ Ashbacker ”), the Bureau erred when it failed specifically to address its disposal of CNM's “counterproposal” requesting the reservation of Channel 17 at Buffalo on a comparative basis with the proposal filed by WNYPBA.

While the Bureau may have omitted mention of its specific disposal of CNM's “counterproposal” to reserve Channel 17 at Buffalo, any error this involved was harmless. First, a third party may not petition for a change in another station's authorization, particularly if the licensee has disavowed an interest in the particular proposed change. In addition, contrary to CNM's argument, the Bureau correctly held that the rule of Ashbacker does not apply to channel exchanges because the channels are occupied. Finally, although the two proposals may have been mutually exclusive as a matter of common usage because they could not co-exist, they were not mutually exclusive within the strict interpretation of that phrase as a term of art applied to broadcast channel allotments, which presumes a short-spacing between two channels.

We also note that the Bureau correctly held that the second aspect of CNM's “counterproposal,” to reserve all unreserved channels of stations operating as noncommercial educational stations was not appropriately filed in this matter. The Bureau was constrained to limit its decision to the merits of the issues as they applied to the instant parties. The issue of reserving all unreserved channels on which licensees operate noncommercially is a matter appropriately raised as a general rulemaking, not as an issue to be resolved in an adjudicatory proceeding such as this.

Finally, CNM repeats an argument made to the Bureau that allowing this transaction could spark a “flood” of requests by other public broadcasters seeking to sell their “second channel” public television stations. CNM claims that the Bureau's answer to this argument mischaracterized the number of noncommercial stations operating on unreserved frequencies. CNM is incorrect. The Bureau correctly referred to the number of communities in which a pair of co-owned (rather than independently owned ) noncommercial stations is operating with one station on an unreserved channel.

Note:

Portions of the original proposed rule were re-written to conform to the new Federal policy on the use of “plain English” in Federal documents. However, the original intent of the text remains the same. Text in the proposed rule has also been amended in this final rule in response to comments submitted by the public (see “Comments Received” below) and to coincide with the CITES Universal Tagging System Resolution.

The yacare caiman was listed as endangered throughout its entire range under the predecessor of the Endangered Species Act (Act) of 1973 on June 2, 1970 (35 FR 8495). (At the time of the original listing, Peru was incorrectly listed as one of the range countries, whereas Paraguay was excluded. In this final rule, we correct that situation.) On July 1, 1975, it was also placed in Appendix II of the Convention on International Trade in Endangered Species of Wild Fauna and Flora—CITES (42 FR 10465). (The species has never been listed in CITES Appendix I, which prohibits international trade in the species if such activity is conducted for primarily commercial purposes and/or determined to be detrimental to the survival of the species.) The endangered listing under the Act prohibited imports and re-exports of the species into/from the United States. However, the Appendix II listing allows for regulated commercial trade elsewhere in the world, based on certain findings. As a result, a substantial U.S. law enforcement problem has occurred because of the different listing status under the Act and under CITES. Imports and re-exports of yacare caiman into/from the United States without an ESA permit are prohibited under the Act, including shipments originating from countries of origin with valid CITES export documents. However, imports and re-exports of products from the common and brown caimans are legal, when accompanied by appropriate CITES documents. Since products manufactured from the yacare caiman, common caiman, and the brown caiman are often indistinguishable as to species from which they are made, products from the prohibited yacare caiman are often commingled with products from non-prohibited taxa among commercial shipments into the United States. The unauthorized entry of prohibited yacare caiman products constitutes a violation of the Act, and if the yacare is legally protected in individual range countries, then Lacey Act violations may also have occurred.

Until relatively recently, Argentina, Bolivia, Brazil, and Paraguay prohibited the export of caiman products (Brazaitis in comments on the October 29, 1990, Federal Register notice [55 FR 43389]). However, CITES Notification to the Parties No. 781, issued on March 10, 1994, indicated that Brazil's CITES Management Authority had registered 75 ranching operations for producing skins of C. c. crocodilus and C. yacare . These ranching operations were established under provisions of Article 6 B of Brazilian Wildlife Law No. 5.197, of November 3, 1967. Caiman yacare from these Brazilian ranches were being legally traded in the international marketplace, except into the United States. Paraguay and Bolivia have also expressed an interest in the legal international marketing of C. yacare skins, and restricted legal hunts are currently allowed (see below).

The U.S. Fish and Wildlife Service (Service) recognizes that substantial populations of crocodilians that are managed as a sustainable resource can be utilized for commercial purposes while not adversely affecting the survival of individual populations of the species, when scientifically based management plans are implemented. When certain positive conservation conditions have been met, the Service has acted to allow utilization and trade from managed populations of the American alligator ( Alligator mississippiensis ), the importation of commercial shipments of Nile crocodile ( Crocodylus niloticus ) from several southern and eastern African countries, and similar shipments of saltwater crocodile ( Crocodylus porosus ) specimens from Australia (61 FR 32356; June 24, 1996). The CITES Parties reviewed management activities prior to transferring certain populations from CITES Appendix I to Appendix II (thereby allowing commercial trade) and included assessments of population status, determination of sustainable harvest quotas (or approval of ranching programs), and the control of the illegal harvest. Management regulations imposed after harvest included the tagging of skins and issuance of permits to satisfy the requirements for CITES Appendix II species.

This final rule and its accompanying special rule allow U.S. commerce in skins, other parts, and products from Caiman yacare , Caiman crocodilus crocodilus , and C. c. fuscus into the United States. These three Caiman populations are widespread in Mexico and Central and South America, and have high reproductive potential (Thorbjarnarson 1992, Thorbjarnarson 1994). In fact, they have survived in spite of substantial legal and illegal harvests in the past (Mourão et al . 1996, Da Silveria and Thorbjarnarson 1999). As in the case of the final rules involving Alligator mississippiensis , Crocodylus niloticus , and Crocodylus porosus (50 CFR part 17), this final rule will allow commerce in Caiman yacare , Caiman c. crocodilus , and C. c. fuscus into the United States only from range countries that regulate the legal harvest and control illegal trade of these three populations, so as to ensure that they are being sustained at biologically sound levels. Furthermore, the Service does not intend to allow importation or re-exportation of Caiman yacare , C. crocodilus crocodilus , or C. c. fuscus specimens from intermediary countries that do not properly control trade in crocodilian skins, other parts, and products.

This rule reclassifies the yacare caiman ( Caiman yacare = C. crocodilus yacare ) from endangered to threatened status under the Act and lists two additional taxa, the common caiman ( C. c. crocodilus ) and the brown caiman ( C. c. fuscus including C. crocodilus chiapasius ), as threatened by reason of similarity of appearance. When traded as skin pieces and products, the yacare caiman is similar in appearance to the common caiman and the brown caiman, which are listed as CITES Appendix II species but are not listed in the Act. Other caiman species will be retained as endangered under the Act, including the black caiman ( Melanosuchus niger ) and the broad-snouted caiman ( Caiman latirostris ). This rule does not affect the endangered or threatened status, under the Act, of any other crocodilian species in the Western Hemisphere.

The original listing for the yacare caiman (under the provisions of the Endangered Species Conservation Act of 1969) was C. yacare , which is the presently accepted taxonomic name for the species (King and Burke 1989) and the name used throughout this rule. Some authors treat the taxon as a subspecies, C. c. yacare , and this is the taxonomic name presently included in the List of Endangered and Threatened Wildlife (50 CFR part 17.11). King believes (in litt.) that C. yacare should be considered biologically as a subspecies or at the end of a morphological cline, but indicates that, nomenclaturally, it is recognized as a full species. A recent study, including an analysis of mitochondrial DNA variation, indicates that the C. yacare of Argentina, Bolivia, Brazil, and Paraguay comprise a single taxonomic unit with substantial genetic, morphological, and zoogeographical similarities (Brazaitis et al . 1993). Those authors indicate that C. yacare populations are effectively separated from C. c. crocodilus populations by mountains and highlands that limit nesting habitat and the migration of individual animals between southern and northern river systems. Caiman yacare , C. c. crocodilus , and C. c. fuscus are considered, on the basis of their DNA sequences, to be distinct populations of a widespread and related taxon (Amato 1992) with C. yacare apparently having greater genetic differences from C. c. crocodilus than C. c. crocodilus has in relationship to C. c. fuscus (Brazaitis et al . 1993). Additional DNA analyses by Brazaitis and others support the interpretation that “ Caiman yacare, C. c. crocodilus , and C. c. chiapasius (probably C. c. fuscus ) are each phylogenetic species, as per the criteria of Davis and Nixon (1992)” (Brazaitis et al . 1997a, Brazaitis et al . 1997b). However, recent work by Busack and Pandya (1996) suggests that C. c. crocodilus and C. c. fuscus comprise a single genetic population at the subspecies level, while confirming that the yacare caiman is a distinct subspecies, C. c. yacare . Currently, no biochemical evidence indicates that recognizable subgroups of C. yacare occur within its distributional limits in the river systems of Argentina, Bolivia, Brazil, or Paraguay (Brazaitis et al . 1993), and, therefore, no such subgroups are recognized in this rule.

On March 15, 1988, the Service received a petition from Mr. Armand S. Bennett, President of Columbia Impex Corporation, requesting the reclassification of the yacare caiman from endangered to threatened status. The Service reviewed the petition and concluded that it did not present sufficient scientific or commercial information to indicate that a reclassification was warranted (55 FR 43387, published October 29, 1990). However, the Service, in the October 29, 1990, Federal Register notice, also solicited relevant data, comments, and publications dealing with the current status and distribution, biological information, and conservation measures pertaining to the yacare caiman. The Service also requested comments about the advisability and necessity of treating the subspecies C. c. crocodilus and C. c. fuscus as endangered or threatened due to similarity of appearance to the listed C. yacare. Based on the information received in response to the Federal Register notice and other available information, the Service published on September 23, 1998, a proposed rule for the reclassification of the yacare caiman from endangered to threatened, with a special rule allowing U.S. commerce in skins, other parts, and products of this species. The Service also proposed listing the common caiman ( C. c. crocodilus ) and the brown caiman ( C. c. fuscus ) as threatened by reason of similarity of appearance.

We received a total of 26 comments in response to the September 23, 1998, proposed rule: 6 were from crocodilian experts, 11 from foreign governments and institutions (Argentina, Bolivia, Brazil, Colombia, Paraguay, and Singapore), 1 from a State government (Louisiana), 6 from the crocodile trade industry (2 based in the United States and 4 foreign), and 2 from non-governmental organizations (World Wildlife Fund and The Humane Society of the United States).

In summary, the majority of foreign government correspondents (Argentina, Bolivia, Brazil, and Colombia) and World Wildlife Fund supported the downlisting of yacare caiman. Likewise, five of the six correspondents from the crocodile trade industry in the United States (Columbia Impex Corporation, Florida) and overseas (Tecno—Caiman Ltd., Argentina; Cooperative of Caiman Breeders from the Pantanal of Mato Grosso, Brazil; Colombian Association of Animal Ranchers; and Singapore Reptile Skin Trade Association) supported the proposed downlisting. However, the Humane Society of the United States opposed it. The Government of Paraguay considered that the original listing of yacare caiman as endangered was unwarranted, and, therefore, commented that the species should be removed form the Act.

Comments from various crocodilian experts, including five members of The World Conservation Union/Species Survival Commission (IUCN/SSC) Crocodile Specialist Group (CSG), were mixed. Dr. James Perran Ross (CSG Executive Officer), Mr. Alejandro Larriera (CSG Regional Vice Chairman for Latin America and Caribbean), and Mr. Tomas Waller (CSG member from Argentina), supported the proposed downlisting of yacare caiman to threatened. Mr. Ted Joanen (CSG Vice Chairman for North America) and Mr. Peter Brazaitis (Forensic Specialist in Herpetology) opposed the proposed downlisting, whereas Prof. F. Wayne King (CSG Deputy Chairman) considered that the original listing of yacare caiman as endangered was unwarranted. The Department of Wildlife and Fisheries of Louisiana partially supported the proposed downlisting.

Comments: The Governments of Argentina (Secretari a de Recursos Naturales y Desarrollo Sustentable—Secretary of Natural Resources and Sustainable Development), Bolivia (Vice-Ministerio de Medio Ambiente, Recursos Naturales y Desarrollo Forestal, Ministerio de Desarrollo Sostenible y Planificacio n—Vice-Ministry of the Environment, Natural Resources and Forestry Development, Ministry of Sustainable Development and Planning; Unidad de Recursos Naturales y Medio Ambiente, Prefectura y Comandancia General del Beni—Natural Resources and Environment Unit, Government of the Department of Beni; Museo Nacional de Historia Nacional—National Museum of Natural History; Museo de Historia Natural, Universidad Auto noma Gabriel Rene Moreno—Museum of Natural History, Gabriel René Moreno Autonomous University), Brazil (Instituto Brasileiro de Meio Ambiente e dos Recursos Naturais Renovaveis—Institute of the Environment and Renewable Natural Resources; and Brazilian Embassy in Washington, DC), and Colombia (Ministerio del Medio Ambiente—Ministry of the Environment) commented that yacare caiman is abundant or has recovered in their respective countries, and, therefore, supported the proposed downlisting of yacare caiman. Argentina supports downlisting of C. yacare , even though it bans export of the species. All four countries (three of which are yacare caiman range countries) believe that the opening of commerce in C. yacare products, through a special rule allowing commercial importation and re-exportation of yacare caiman specimens into/from the United States, will provide an economic incentive for the protection of the species throughout its range.

Prof. F. Wayne King, Dr. James Perran Ross, and Mr. Tomas Waller (all members of CSG) also considered the yacare caiman to be abundant throughout most of its range. Furthermore, they argued that enough national and international regulatory and management mechanisms (such as CITES) are in place in the range countries, so that illegal harvest no longer constitutes a major threat to the species.

Finally, based on recent field surveys, World Wildlife Fund also did not consider C. yacare to be threatened. Furthermore, they recognized that the proposed downlisting and special rule will help reconcile listings of yacare caiman in the Act and CITES.

Response: We continue to believe that the downlisting of yacare caiman from endangered to threatened, with a special rule allowing U.S. commerce in caiman skins, other parts, and products, is warranted (See “Summary of Factors Affecting Caiman yacare ” below).

Comment: Prof. F. Wayne King, Dr. John Perran Ross, and the Government of Paraguay (Ministry of Agriculture and Cattle Ranching) considered C. yacare to be abundant enough in the wild to prompt its complete removal from the Act.

Response: Although wild populations of yacare caiman have recovered in portions of the species' range, we note that some populations have not fully recovered, and, therefore, we continue to believe the threatened classification is appropriate (See “Summary of Factors Affecting Caiman yacare ” below).

Comments: Mr. Ted Joanen, Mr. Peter Brazaitis, the Department of Wildlife and Fisheries of Louisiana, and The Humane Society of the United States opposed the proposed special rule allowing U.S. commerce in skins, parts, and products of yacare caiman because of concerns about current management of the species in some range countries. They argued that some range countries lack protected habitats, long-term monitoring programs, effective national legislation, or effective national law enforcement to prevent uncontrolled harvest of the species.

To address those concerns, Mr. Joanen and Dr. John Perran Ross suggested that importation of C. yacare specimens from individual range countries not be allowed until these countries provide the Service with detailed written descriptions of their respective management plans, regulations, and ongoing studies for the species, as was requested in previous rules involving Australian saltwater crocodile, American alligator, and Nile crocodile. Likewise, the National Museum of Natural History of Bolivia recommended amending the special rule, so as to require that all skins allowed for import into the United States originate from populations under a sustainable use management plan, such as the one developed in Bolivia. Bolivia believes that this requirement will prevent the sale of illegally hunted crocodilian skins that are seized by government agencies, but legalized through government-sponsored auctions.

Response: We note that enforcement of domestic regulations pertaining to harvest of wild yacare caimans is a domestic issue. No government or agency provides perfect management, but many governments and agencies provide sufficient management to permit sustainable use of certain individual species. A reasonable standard for the Service to use to determine sufficiency of a wildlife management program in any country is to compare management of a foreign species with management in the United States. In the United States, poaching of white-tailed deer still occurs, despite strict State laws regulating hunting of the species. However, State enforcement of deer hunting laws is sufficient to continue allowing sustainable harvest of the species.

Similarly, although all range countries of yacare caiman regulate the harvest of the species, they are not always capable of enforcing such regulations, particularly in isolated areas. Although we acknowledge that illegal hunting of yacare caiman for local trade still occurs in many of the species' range countries, international illegal trade in crocodilian skins has been reduced significantly since the adoption by CITES Parties of Resolution Conf. 9.22 on the Universal Tagging System Resolution for crocodilians in November 1994 (see “Inadequacy of existing regulatory mechanisms” below). Given that all four range countries (Argentina, Bolivia, Brazil, and Paraguay) are CITES Parties, we believe that international trade in yacare caiman is adequately regulated to allow commercial importation and re-exportation of yacare caiman into/from the United States.

Furthermore, C. yacare and other species of caiman appear to be resilient to hunting. In Brazil, the impact of hunting on caiman populations is reduced by strong bias for males among hunted animals (Mourão et al. 1996, Da Silveria and Thorbjarnarson 1999). In C. yacare and C. crocodilus, this bias is largely due to the fact that hunters target mostly the largest animals, which are almost exclusively males. In the case of black caiman ( Melanosuchus niger; a species listed as endangered in the Act), male-biased sex ratios among harvested animals appear to be caused by preference of adult females for more protected and difficult to reach areas. Since a single male can fertilize several females, this male-biased harvest is less likely to have a negative impact on the reproductive potential of caiman populations. Impact of hunting on caiman is also reduced by propensity of hunters to concentrate their harvest in areas easily accessible (Mourão et al. 1996).

In anticipation to a possible increase in illegal harvest of yacare caiman, this rule contains language prohibiting importation or re-exportation of yacare caiman skins, other parts, or products, if we obtain reliable information indicating that the countries of origin or re-export are engaging in practices that are detrimental to the conservation of yacare caiman populations in the wild.

Nevertheless, we agree with the suggestion made by several correspondents of requesting updated information from the yacare caiman range countries regarding their respective management plans, regulations, and ongoing studies for the species. Maintenance of such information in our files would permit us and other interested parties to better understand the measures being taken by range countries to ensure that harvest of yacare caiman is done in a sustainable manner. Furthermore, submission of such information by range countries on a regular basis would allow us to monitor the status of yacare caiman in the wild, as required under the Act. Therefore, we have added language in this final rule requesting that the range countries of C. yacare (Argentina, Bolivia, Brazil, Paraguay) provide to the Service every 2 years current information on the status of these taxa in their countries (see “The Monitoring of Yacare Caiman” below). We will also monitor trade in the species by requesting import and export data on C. yacare from the World Conservation Monitoring Centre (WCMC), a repository of the annual CITES reports prepared and submitted to the Secretariat by CITES Parties.

Comments: Mr. Alejandro Larriera and the Colombian Association of Animal Ranchers (AZOOCOL) supported the right of the United States to prohibit imports from countries not in compliance with the CITES Universal Tagging System Resolution or engaging in practices detrimental to the survival of the species. However, the Singapore Reptile Skin Trade Association expressed concerns about unilateral U.S. prohibition of crocodilian imports from countries not in compliance with CITES requirements. Columbia Impex Corporation also commented that the United States should never have regulations different than those set by other countries.

Response: We note that Article XV of CITES allows CITES Parties to “adopt stricter domestic measures” regulating trade, taking, possession, or transport of specimens of any species, regardless of whether the species is listed in the CITES Appendices or not. For example, some CITES Parties currently prohibit the export of all their native species (Australia) or require permits for the export of any of their native wildlife (Mexico and Brazil), even though many of the species are not listed in the CITES Appendices. In the United States, Congress has enacted several laws for the protection of native and foreign wildlife (including the African Elephant Conservation Act, Eagle Protection Act, Marine Mammal Protection Act, Migratory Bird Treat Act, Wild Bird Conservation Act, Rhinoceros and Tiger Conservation Act, and the Endangered Species Act), many of which impose stricter restrictions on trade of certain species compared to CITES. Thus, adoption of this rule is in no way contrary to the CITES treaty.

Comment: Prof. King and Dr. Ross expressed concern about unilateral prohibition of yacare caiman imports from countries not in compliance with the CITES Universal Tagging System Resolution based on “information from * * * other reliable resources'.

Response: We agree that any decision regarding possible U.S. unilateral prohibition of yacare caiman imports or re-exports from countries not in compliance with the CITES Universal Tagging System Resolution should be based on the best available information. As recommended by Dr. Ross, we intend to consult with experts within and outside our agency (such as the Service's National Fish and Wildlife Forensics Laboratory, university and natural history museum researchers, and IUCN Crocodile Specialist Group), the Management and Scientific Authorities of other countries, and any other qualified persons prior to making a final determination related to the possible prohibition of yacare caiman imports from any country.

Comments: Mr. Ted Joanen and Mr. Peter Brazaitis expressed concern about implementation of the proposed rule by the Service, particularly since most caiman skins imported into the United States arrive in the form of manufactured products, which are not marked, and, therefore, difficult to identify. Mr. Brazaitis also commented that Federal regulations do not require tamper-proof identification tags on crocodile skins for importation.

Response: We consider that international illegal trade in crocodilian skins has been reduced significantly since the adoption of Resolution Conf. 9.22 (Universal Tagging System Resolution) by CITES Parties. Therefore, requiring that yacare caiman shipments imported into the United States be accompanied by proper CITES documentation, as described in this rule, diminishes the likelihood of importing yacare caiman specimens obtained in a manner detrimental to the species. Furthermore, by allowing U.S. commerce in yacare caiman, we eliminate the incentive to intentionally misidentify yacare caiman specimens for importation into the United States. Consequently, we will be able to gather more accurate trade data on the species. At this time, the CITES Universal Tagging System Resolution is codified in the Federal regulations just for Alligator mississippiensis, Crocodylus niloticus, and Crocodylus porosus. However, we are currently in the process of updating the U.S. Code of Federal Regulations to include language codifying the CITES Universal Tagging System Resolution for all crocodilians (see Federal Register notice 62 FR 42093, published on August 5, 1997). In the meantime, the language contained in this rule implements the CITES Universal Tagging System Resolution for shipments involving C. yacare, C. crocodilus fuscus, and C. c. crocodilus.

Comment: The Humane Society of the United States supported the listing of C. crocodilus fuscus and C. c. crocodilus as threatened because of similarity of appearance, as well as the conditions in the special rule. However, Strictly Reptiles, Inc., opposed listing of C. c. fuscus and C. c. crocodilus because of similarity of appearance, since it believes that C. yacare, C. c. fuscus, and C. c. crocodilus are easily distinguishable. Columbia Impex Corporation also commented that C. c. fuscus and C. c. crocodilus are easily distinguishable once skins are tanned, whereas the Government of Paraguay commented that as long as skins are properly tagged and accompanied by CITES permits, there is no chance for misidentification of shipments involving C. yacare, C. c. fuscus, and C. c. crocodilus.

Response: Controversy still exists as to whether C. yacare, C. c. fuscus and C. c. crocodilus can be distinguished using morphological characters. Listing of C. c. fuscus, and C. c. crocodilus because of similarity of appearance will bring C. yacare and all known subspecies of C. crocodilus under the Act ( C. c. apaporiensis is already listed as endangered) and, therefore, will facilitate and expedite inspection of C. crocodilus and C. yacare shipments into the United States. Wildlife inspectors at the ports will no longer face the time-consuming and difficult task of examining individual C. crocodilus and C. yacare shipments to determine whether or not they involve protected species and/or subspecies, as all shipments involving these two taxa will be treated equally.

Comment: The Government of Colombia and the Singapore Reptile Skin Trade Association commented that listing of C. c. fuscus and C. c. crocodilus will make trade in these two subspecies more difficult because of the need for permits and inspections. Likewise, the Colombian Association of Animal Ranchers (AZOOCOL) opposed listing of C. c. fuscus and C. c. crocodilus because of similarity of appearance because they believe that such listing will punish sustainable use of C. crocodilus in Colombia.

Response: As noted by the IUCN Crocodile Specialist Group in their October 1998—December 1998 newsletter (Volume 17, Number 4, pages 15-18), the listing of C. c. fuscus and C. c. crocodilus as threatened by similarity of appearance does not add any new requirements to those already in place for the importation and re-exportation of skins, other parts, and products of these two subspecies into/from the United States. Since C. c. fuscus and C. c. crocodilus are currently listed in Appendix II of CITES, a CITES permit issued by the exporting country is already required for importation of skins, parts, and products of these two subspecies into another country. This rule only requires that shipments involving skins and other parts of C. c. fuscus and C. c. crocodilus be tagged in accordance with the CITES Universal Tagging System Resolution and accompanied by valid CITES documents, as is currently required. Furthermore, inclusion of these two subspecies just codifies in the U.S. Federal regulations an existing international requirement.

However, this special rule does not cover the importation of viable caiman eggs or live caimans into the United States. In addition to a valid CITES export permit (already required), importation of these two types of specimens of C. c. fuscus and C. c. crocodilus will require an Endangered Species Act import permit. This requirement will allow scrutiny of individual applications for importation of live caimans or eggs so as to prevent accidental introduction of these exotic species into the United States (in accordance with Executive Order 13112 on Invasive Species issued by President Bill Clinton on February 3, 1999), an event that may have negative economic and ecological impacts on humans, native wildlife, and ecosystems in the United States.

Comments: Dr. John Perran Ross, the Singapore Reptile Skin Trade Association, and the Governments of Colombia and Singapore commented on the 25 percent restriction on replacement tags and opposed the measure. Dr. Ross and the Singapore Reptile Skin Trade Association noted that the special rule goes beyond CITES restrictions on replacement tags (Resolution Conf. 9.22), which the United States helped draft. The Government of Colombia considered this restriction an indication of mistrust of range and re-exporting countries. The Government of Singapore and the Singapore Reptile Skin Trade Association commented that, since tanneries regularly removed tags from raw skins before processing them, the 25 percent restriction will create problems for skin traders in their country. Singapore made two suggestions to resolve this issue: (1) shipments involving re-tagged skins must include all tags from the country of origin, and (2) re-exporting countries should fax copies of their re-export CITES permits as well as the CITES permits from the country of origin.

Response: As noted above, Article XV of CITES allows for CITES Parties to adopt stricter domestic regulations for the protection of wildlife, whether the species is listed in the CITES Appendices or not. Therefore, adoption of this rule is not contrary to CITES. Moreover, this 25 percent restriction on replacement tags is consistent with the requirements for importation of saltwater crocodile ( Crocodylus porosus ) and Nile crocodile ( Crocodylus niloticus ) published in the Federal Register on June 24, 1996 (61 FR 32356—“Endangered and Threatened Wildlife and Plants; Reclassification of Saltwater Crocodile Population in Australia From Endangered to Threatened With Special Rule for the Saltwater and Nile Crocodiles”).

Section 4(a)(1) of the Act (16 U.S.C. 1531 et seq. ) and regulations promulgated to implement the listing provisions of the Act (50 CFR part 424) set forth five criteria to be used in determining whether to add, reclassify, or remove a species from the list of endangered and threatened species. These factors and their applicability to populations of the yacare caiman in South America are as follows:

Since the initial listing of the yacare caiman, controversy has been associated with defining the ranges of caiman species, especially that of C. yacare in southern South America. To assist in the clarification of the distribution and status of C. yacare, the CITES Secretariat, in conjunction with the World Conservation Union/Species Survival Commission (IUCN/SSC) Crocodile Specialist Group (CSG), undertook a survey (starting in late 1986 and early 1987) to develop a conservation program for crocodilians of the genus Caiman. These surveys were conducted under the auspices of CITES and were carried out by the CSG and the Governments of Brazil, Bolivia, and Paraguay. We review the available data from these studies (Brazaitis 1989a; Brazaitis et al. 1990; King and Vídez Roca 1989; and Scott et al. 1988 and 1990) on the distribution, ecology, and status of C. yacare in this and following sections assessing factors affecting the species.

Caiman yacare is widely distributed throughout the lowland areas and river systems of northeastern Argentina, southeastern and northern Bolivia, Paraguay, and the western regions of the Brazilian States of Rondonia, Mato Grosso, and Mato Grosso do Sul (Thorbjarnarson, J. B. 1992). The range includes the entire Guapore River (= Itenes River) drainage, including its headwaters in the Brazilian State of Mato Grosso and its tributaries in northeastern Bolivia; eastern Bolivia and western Brazil throughout the drainage of the Paraguay River and the Pantanal of Brazil; Paraguay River and southern Pilcomayo River in Paraguay; and the lower Salado River, the Paraná River east to the Uruguay River, and south to the mouth of the Paraná River in Argentina (Brazaitis et al. 1993). The yacare caiman is found in a wide variety of habitats, including those that are altered by humans. The species occurs in vegetated and non-vegetated large open rivers, secondary rivers and streams, flooded lowlands and forests, roadside ditches and canals, oxbows, large and small lakes and ponds, cattle ponds, and streams (Brazaitis et al. 1988).

The common caiman, Caiman crocodilus crocodilus, occurs in the drainage basins of the Amazon and Orinoco Rivers in French Guiana, Surinam, Guyana, Venezuela, eastern Ecuador, Colombia, Peru, and Brazil (Thorbjarnarson 1992). A narrow zone of intergradation exists between C. yacare and C. c. crocodilus along the northern border of Bolivia and Brazil in the State of Acre in the Acre River and Abuna drainages, northward to approximately Humaita on the Madeira River in the Brazilian State of Amazonas (Brazaitis et al. 1990).

The brown caiman, Caiman crocodilus fuscus (including C. c. chiapasius ), occurs from Mexico through Central America to Colombia (west of the Andes), along the coastal and western regions of Venezuela, and south through Ecuador to the northwestern border of Peru. The CITES Secretariat and several authors consider C. c. chiapasius a synonym of C. c. fuscus, and we consider it so for the purposes of this rule.

The expansion of cattle grazing and the concurrent construction of permanent water sources for cattle has increased the dry season freshwater habitats available to yacare caiman in some areas. However, cattle grazing has also diminished habitat in other areas by increasing the salinity of waterways (King et al. 1994). Habitat destruction and deterioration has taken place and continues to occur in parts of the species' range. Deforestation for road construction and mining not only destroys habitat, but also increases access of poachers to some yacare habitats (Brazaitis et al. 1996). Increasing human populations, development of hydroelectric projects, draining of wetlands, and deteriorating water quality due to siltation or the extensive dumping of pollutants (particularly as a result of mining and industry) also have caused habitat degradation. However, yacare caiman habitat is very extensive and the species is so widespread that it is very unlikely that the species is presently endangered or threatened because of the destruction, modification, or curtailment of its habitat or range.

In the past, large numbers of C. yacare were taken from South America, particularly from Brazil, in violation of domestic laws protecting the species (Brazaitis et al. 1988, Brazaitis et al. 1996). Although yacare caiman populations declined in many areas, the species still could be found in varying population densities in most areas where suitable habitat remained (Brazaitis et al. 1988). Yacare caiman found in some surveys almost a decade ago also were small, extremely wary, and exhibited a high male-biased sex ratio. One hypothesis suggested that females might be more heavily harvested at a time when they might be very vulnerable while protecting their nests (Brazaitis 1989a).

In spite of substantial legal and illegal harvests in the past, many caiman populations have been able to survive and recover after being protected or properly managed (Mourão et al. 1996, Da Silveria and Thorbjarnarson 1999). Recent research also suggests that C. yacare and other species of caiman in Brazil, and most likely other parts of the species' range, are resilient to hunting. Recent estimates of C. yacare in the Brazilian Pantanal show densities as high as 147 individuals/square kilometer, far larger than those reported for other crocodilians (Coutinho and Campos 1996). In Brazil, the impact of hunting on caiman populations is reduced by strong bias for males among hunted animals (Mourão et al. 1996, Da Silveria and Thorbjarnarson 1999). In C. yacare and C. crocodilus, this bias appears to be largely due to the fact that hunters target mostly the largest animals, which are almost exclusively males. In the case of black caiman ( Melanosuchus niger; a species listed as endangered under the Act), male-biased sex ratios among harvested animals appear to be caused by preference of adult females for more protected and difficult to reach areas. Since a single male can fertilize several females, this male-biased harvest is less likely to have a negative impact on the reproductive potential of caiman populations. Impact of hunting is also reduced by propensity of hunters to concentrate their harvest on areas that are easily accessible (Mourão et al. 1996).

To ensure sustainable management of C. yacare in Brazil, the Instituto Brasileiro de Meio Ambiente e dos Recursos Naturais Renovaveis (IBAMA—Brazilian Institute for Environment and Renewable Natural Resources) regulates commerce of C. yacare. To date, IBAMA has approved and registered 65 yacare breeding facilities, with a production of over 80,000 skins (communication from the Embassy of Brazil, Washington, DC). In recent months, IBAMA has also teamed up with other Brazilian Federal and State government agencies to help enforce Brazilian laws for the protection of wildlife, thus reducing illegal trade of all native wildlife in Brazil.

The yacare caiman remains widely distributed in Bolivia (communications from Unidad de Recursos Naturales y Medio Ambiente, Prefectura y Comandancia General del Beni, Bolivia—Natural Resources and Environment Unit of the Department of Beni; Museo Nacional de Historia Nacional, La Paz, Bolivia—National Museum of Natural History; Museo de Historia Natural, Universidad Autónoma Gabriel René Moreno, Santa Cruz, Bolivia—Natural History Museum, Gabriel René Moreno Autonomous University; and Viceministro de Medio Ambiente, Recursos Naturales y Desarrollo Forestal, Ministerio de Desarrollo Sostenible y Planificación, La Paz, Bolivia—Vice-Minister of the Environment, Natural Resources and Forestry Development, Ministry of Sustainable Development and Planning). Although caiman populations in some rivers were extirpated, caimans still survive in Bolivia due to abundant habitat and their rapid growth to sexual maturity. Where protected, populations have recovered, including those in the extensive wetlands of “El Pantanal”. In fact, the Bolivian Red Book lists C. yacare as a low-risk species (communication with Dr. Mario Suárez, Director of the Museo de Historia Natural, Universidad Autónoma Gabriel René Moreno, Santa Cruz, Bolivia—Natural History Museum, Gabriel René Moreno Autonomous University). Consequently, Bolivia has recently approved conservation and sustainable use plans for C. yacare in the Departments of Beni and Santa Cruz. Although a decade ago it was reported that the long-term continuation of the status quo could lead to the endangerment of the species in Bolivia (King and Videz Roca 1989), we believe that situation has improved considerably, with effective management of the species by Bolivian authorities.

In Paraguay, King et al. (1994) reported that large populations of yacare could still be found in suitable habitats. Caiman yacare populations in Paraguay are currently being monitored annually (communications with Ministerio de Agricultura y Ganadería—Ministry of Agriculture and Cattle Ranching, Paraguay's CITES Authority). Recent surveys show that populations are either stable or increasing. Based on survey data, hunting quotas are established accordingly.

The CSG did not conduct a survey and status assessment in Argentina. However, Argentina currently bans export of the species (communication with Secretaria de Recursos Naturales y Desarrollo Sustentable—Ministry of Natural Resources and Sustainable Development).

In summary, hunting for hides, both legal and illegal, has in the past been the major threat to the survival of populations of yacare caiman. However, the species has recovered in many parts of its range, and the four range countries either provide protection to the species by domestic legislation and/or regulate harvest by established hunting seasons and limits on the size of animals that can be legally killed for commercial trade. In spite of these actions, we believe sufficient cause exists to find, at this time, that some populations of the yacare caiman still may be threatened by illegal hunting for domestic trade in portions of its extensive range (see “Inadequacy of existing regulatory mechanisms” below).

The eggs of C. yacare are eaten by a variety of predators, which in some localities include humans, and hatchlings are consumed by a variety of predators including other crocodilians. However, we have no evidence, at this time, that disease or predation are significant factors affecting C. yacare populations.

The yacare caiman is protected in Argentina by a total ban on commercial hunting and on the export of raw and tanned hides and other products. Brazil bans the export of wildlife and wildlife products from native species (Article 6 B of Brazilian Wildlife Law No. 5.197, of November 3, 1967), except from approved ranching programs. In Paraguay, the yacare caiman was nominally protected by a 1961 Presidential decree that prohibits hunting, commerce, and import and export of all native wildlife, their parts, and products. However, a limited harvest of yacare caiman is currently allowed, with quotas being determined based on annual surveys of the species. Bolivia permits the hunting of yacare from January 1 to June 30, and imposes a 1.5 m size limit on all harvested caiman. The yacare was additionally listed as endangered under the U.S. Endangered Species Conservation Act of 1969 and was added to Appendix II of CITES in 1975.

In the past, existing legislation and decrees protecting the yacare caiman or regulating its harvest have been inadequately or unevenly enforced. Many yacare caiman were apparently illegally killed in Argentina, Bolivia, Brazil, and Paraguay, and their skins were illegally exported with real or forged CITES export permits from some South American countries. The CITES Secretariat, in conjunction with the CSG, and with the permission and cooperation of the range countries, conducted a series of surveys of the status of the yacare caiman during the 1980s and found major inadequacies associated with the existing regulatory mechanisms. For example, Bolivia did not effectively enforce either the hunting season restriction or the minimum size limit restrictions on harvested animals. In the mid-1980s, large numbers of poached yacare caiman skins were illegally exported to Paraguay, encouraging the transnational movement of illegal wildlife products through that country in violation of CITES. As a result, in June 1986 and to November 1987, the Bolivian Government imposed a ban on the export of wildlife specimens (Decreto Supremo 21312 and Decreto Supremo 21774, respectively) and, through the CITES Secretariat, asked that the Parties to the Convention no longer accept certain CITES export permits issued illegally by the former Bolivian Government (Notice of Information No. 3-50 FR 34016; Notice of Information No. 4-50 FR 34016; Notice of Information No. 8-50 FR 50965; Notice of Information No. 11-51 FR 43978).

Some countries of manufacture, knowingly or unknowingly, have also apparently accepted illegally killed and illegally exported yacare caiman, used these materials in the production of leather goods, and shipped the resulting finished products to the United States. Although a live or whole yacare caiman can be distinguished from other caiman species, the products from tanned or processed skins are often very difficult to distinguish from other caiman species. U.S. Fish and Wildlife Service Wildlife Inspectors, by clearing crocodilian products from these leather good manufacturing countries, could have inadvertently allowed the import of parts and products from illegally harvested yacare caiman. Such imports would constitute violations of the U.S. Lacey Act and the Endangered Species Act, and would be detrimental to the conservation of the yacare caiman by not effectively promoting the sustainable management of the species.

However, currently available information indicates that many of the irregularities have been corrected since the CITES survey in the 1980s. A combination of increased awareness of conservation needs, reduced crocodilian hide prices, increased action by government and international agencies, and increased difficulty in marketing illegally harvested crocodilian skins have relieved some of the hunting pressure on wild caiman populations (Scott et al. 1990, King et al. 1994).

International illegal trade in crocodilian skins has been reduced significantly since the adoption by the CITES Parties of Resolution Conf. 9.22 (Universal Tagging System Resolution for the Identification of Crocodilian Skins) in November 1994. This resolution establishes an universal tagging system for the tracking of international trade in crocodilian skins, other parts, and products, which includes: (1) Universal tagging of raw and processed crocodilian skins with non-reusable tags for all crocodilian skins entering international trade, unless they have been further processed and cut into smaller pieces; (2) tagging of transparent containers for crocodilian parts; (3) use of non-reusable tags that include as a minimum the International Organization for Standardization two-letter code for the country of origin, a unique serial identification number, a standard species code, and the year of production or harvest; (4) registration of such non-reusable tags with the CITES Secretariat; (5) recording of the same information that appears on the tags on the export permit, re-export certificate, or other Convention document; and (6) implementation by the re-exporting countries of an administrative system that allows for effective matching of imports and re-exports, and ensures that the original tags are intact upon re-export, and, if tags are broken, the re-tagging of skins is performed as described in CITES Resolution Conf. 9.22. Given that all four range countries are Parties to CITES (Argentina acceded on April 8, 1981; Bolivia on October 4, 1979; Brazil on November 14, 1975; Paraguay on February 13, 1977), we believe that international trade in yacare caiman is adequately regulated.

To improve implementation of CITES, at the invitation of the Bolivian Government and with the financial support of the U.S. Agency for International Development's Partnership for Biodiversity, the Service's Office of Scientific Authority and Division of Law Enforcement visited Bolivia in the summer of 1998 to conduct CITES training. The participants included not only staff from the Bolivian CITES Management and Scientific Authorities, but also representatives from other Bolivian governmental agencies involved in the implementation of CITES, including the Bolivian National Police and Defense Ministry. During the one-week training, the Service also discussed with the participants how to improve collaboration between the United States and Bolivia in the protection and conservation of wildlife. The training participants also took this unique opportunity to develop a plan to implement and coordinate CITES as well as other fish and wildlife enforcement activities in Bolivia.

Although all four range countries have taken steps to curtail illegal international trade in yacare caiman and other crocodilians, enforcement of already existing laws regulating domestic trade in crocodilians may still be insufficient in some areas (Brazaitis et al. 1996, Mourão et al. 1996), due mostly to the limited resources available to local enforcement agencies as well as the remoteness and inaccessibility of many of the areas. Therefore, we believe that sufficient cause exists to find that the yacare caiman is presently threatened, but no longer endangered, in some parts of its range by the inadequacy of the existing regulatory mechanisms.

A recent new possible threat to yacare caimans and their habitats is chemical pollution, primarily from mineral mining and industry (Brazaitis et al. 1996). However, short-and long-term effects of chemical contamination on yacare caiman populations are unknown.

Wildlife, such as the yacare caiman, can be advantageously utilized in commerce if management is sufficient to maintain satisfactory habitats and harvest is at levels that allow maintenance of healthy and sustainable populations. The yacare, under such conditions, can provide revenue to pay for its own management.

In developing this rule, we have carefully assessed the best available biological and conservation status information regarding the past, present, and future threats faced by the yacare caiman. The available data from these studies on the distribution, ecology, and status of C. yacare indicate that this species is not endangered or in danger of extinction in any significant portion of its range. The Service has concluded that an extensive population of yacare caiman still exists over large and seasonally inaccessible areas within the four South American range countries.

The Service recognizes that yacare caimans near human populations may be illegally taken. However, the best available information indicates that this and many other species of crocodilians are capable of surviving despite unregulated harvests and that new international requirements are being implemented to curtail international trade in illegally harvested crocodile skins.

Criteria for reclassification of a threatened or endangered species, found in 50 CFR part 424.11(d), include extinction, recovery of the species, or error in the original data for classification. The original listing did not encompass the survey information, such as Medem's 1973 work, which documented an extensive range for this species. Given the reproductive capabilities and current status of the yacare caiman, this species is more properly considered not as in danger of extinction throughout all or a significant portion of its vast range, but as threatened due to inadequately regulated domestic commercialization in some portions of its range. Therefore, if range countries continue to successfully implement measures to regulate its harvest and domestic commercialization, the yacare caiman should be able to maintain stable and sustainable population levels.

In determining whether to treat a species as endangered or threatened due to similarity of appearance, the Director shall consider the criteria in section 4(e) of the Endangered Species Act. Section 4(e) of the Act and criteria of 50 CFR 17.50 set forth three criteria in determining whether to list a species for reasons of similarity of appearance. These criteria apply to populations of common caiman ( C. c. crocodilus ) in South America and the brown caiman ( C. c. fuscus ) in Mexico and Central and South America.

The Service has intercepted numerous shipments of manufactured items with documents identifying them as a lawfully tradeable Appendix II species (most often C. c. crocodilus and C. c. fuscus ) and have determined that they are, in fact, made from yacare caiman. In other instances, products from other endangered species, such as Melanosuchus niger, have been declared as C. c. fuscus. One reason for this situation is that many vendors, buyers, and traders in South and Central America have deliberately misidentified yacare caiman by obtaining documents purporting to permit export of other Appendix II species. In addition, representatives of the manufacturing industry and others have indicated that a common practice in the trade is to commingle skins at the tanning, cutting, and assembly stages of the manufacturing process so that inadvertent commingling frequently occurs. While some affirmative yacare caiman identifications can be made in manufactured products, in numerous instances, proper identifications are not made and significant quantities of yacare caiman are probably being imported unlawfully. This situation occurs because a positive identification of yacare caiman depends upon whether certain indicator patterns are present on a piece of skin. However, a large proportion of commercially useful pieces of skins do not bear these identification patterns.

In his comments submitted in response to the October 29, 1990, Federal Register notice, Mr. Peter Brazaitis provided extensive information on the similarity of appearance among six caiman and crocodilian species or subspecies as they occur in manufactured products and some hides. He discussed in detail the indicator characteristics for C. yacare, C. c. crocodilus, C. c. fuscus, C. c. apaporiensis, C. latirostris, and M. niger for live animals, whole skins, and untanned skins that remain after tanning and cutting, and how frequently similar characteristics found on pieces of skin prevent positive identification.

The three criteria for listing of other caiman by similarity of appearance are discussed below:

(1) The degree of difficulty enforcement personnel would have in distinguishing the species, at the point in question, from an endangered or threatened species (including those cases where the criteria for recognition of a species are based on geographical boundaries).

Caiman yacare, C. c. crocodilus, and C. c. fuscus are distinguishable as live animals because of different markings and coloration in the head region. However, manufactured products (shoes, purses, belts, or watchbands, etc.) are extremely difficult even for an expert to identify as to the species of origin (Brazaitis 1989b). Products from the three crocodilians often cannot readily be distinguished by law enforcement personnel, which means that under present conditions mixed products from U.S. listed and unlisted species may occur in U.S. commerce.

(2) The additional threat posed to the endangered or threatened species by loss of control occasioned because of the similarity of appearance.

The inability to adequately control commerce in caiman products has likely allowed losses to occur to other endangered species such as C. latirostris and M. niger. For example, the Service has records of leather goods manufactured from M. niger being included in product shipments declared as C. c. fuscus.

Another problem occurs when unlawfully harvested yacare caiman skins enter commerce in non-range South American countries and then are re-exported with documents describing the export as native caiman. The Service has intercepted a number of shipments of yacare caiman from Colombia despite domestic laws that permit only the export of caimans from captive breeding programs, and despite the fact that the yacare caiman does not occur naturally in Colombia.

This rule allows for cessation of commercial trade to the United States if CITES bans are imposed for failure to implement appropriate trade control measures, including the use of non-reusable tags for species identification. A secondary effect of this rule may be to enhance the management of C. yacare, C. c. crocodilus, and C. c. fuscus to facilitate commerce in products of caiman species that can tolerate a managed commercial harvest, and to more effectively protect the endangered species of caiman or of other taxa that cannot sustain a managed commercial harvest.

(3) The probability that so designating a similar species will substantially facilitate enforcement and further the purposes and policy of the Act.

The Division of Law Enforcement presently inspects caiman shipments to determine the validity of the proffered Appendix II CITES documents and consults herpetologists to evaluate specimens when warranted. Due to the problems of commingling and identification, a substantial number of seizures, forfeitures, and penalty assessments have been contested. Judicial decisions have affirmed the validity of the Service's identifications, but the expenditure of funds and resources is disproportionate to that devoted to other species. An earlier judicial forfeiture action was concluded after 6 years, a full trial, and the employment, by both parties, of several expert witnesses. One of the purposes of this similarity-or-appearance listing is to shift the inquiry from one of evaluating a particular shipment to one of supporting the effectiveness of the CITES crocodilian skin control system as well as the effectiveness of yacare caiman management programs in countries of origin and re-export, thereby enhancing the management of the species while permitting other allocations of enforcement resources.

The improved management of trade should enhance the conservation status of each species, and this listing action and special rule should assist CITES Parties to control the illegal trade in caiman skins, products, and parts.

Conservation measures provided to species listed as endangered or threatened under the Act include recognition of conservation status, requirements for Federal protection, and prohibitions against certain practices. Recognition through listing encourages and results in conservation actions by Federal, State, and private agencies and groups, and individuals.

Section 7(a) of the Act, as amended, and as implemented by regulations at 50 CFR part 402, requires Federal agencies to evaluate their actions that are to be conducted within the United States or on the high seas, with respect to any species that is proposed to be listed or is listed as endangered or threatened and with respect to its proposed or designated critical habitat, if any is being designated. However, given that C. yacare is not native to the United States, no critical habitat is being proposed for designation with this rule.

Currently, with respect to C. yacare, no Federal activities, other than the issuance of CITES export permits, are known that would require conferral or consultation. According to the CITES treaty, Appendix-II species need only a CITES export permit issued by the exporting country for their importation into another country. However, because of its listing as endangered under the Act, the importation and exportation of specimens from C. yacare presently require an Endangered Species Act permit issued by the Office of Management Authority. Consequently, a consultation with our Office of Scientific Authority is currently required before our Office of Management Authority can issue any import or export permit for C. yacare.

The listing of C. c. fuscus and C. c. crocodilus as threatened by similarity of appearance does not add any new requirements to those already in place for the importation or re-exportation of skins, other parts, and products of these two subspecies into/from the United States. This rule just requires that shipments involving skins and other parts of C. c. fuscus and C. c. crocodilus be tagged in accordance with the CITES Universal Tagging System Resolution and accompanied by valid CITES export documents, as is currently required. No U.S. import permits will be required for these specimens. However, this special rule does not cover the importation of viable caiman eggs or live caimans into the United States. In addition to a valid CITES export permit (already required), importation of viable eggs or live specimens of C. c. fuscus and C. c. crocodilus will require an Endangered Species Act import permit.

Section 8(a) of the Act authorizes the provision of limited financial assistance for the development and management of programs that the Secretary of the Interior determines to be necessary or useful for the conservation of endangered species in foreign countries. Sections 8(b) and 8(c) of the Act authorize the Secretary to encourage conservation programs for foreign endangered species, and to provide assistance for such programs, in the form of personnel and the training of personnel.

Sections 4(d) and 9 of the Act, and implementing regulations found at 50 CFR part 17.31, (which incorporate certain provisions of 50 CFR part 17.21), set forth a series of prohibitions and exceptions that generally apply to all threatened wildlife. These prohibitions, in part, make it illegal for any person subject to the jurisdiction of the United States to take (within U.S. territory or on the high seas), import or export, ship in interstate commerce in the course of a commercial activity, or sell or offer for sale in interstate or foreign commerce any listed species. It also is illegal to possess, sell, deliver, carry, transport, or ship any such wildlife that has been taken illegally. Certain exceptions apply to employees or agents of the Service, other Federal land management agencies, the National Marine Fisheries Service, and State conservation agencies (50 CFR part 17.21(c)(3) and part 17.31(b)).

Permits may be issued to carry out otherwise prohibited activities involving threatened wildlife species under certain circumstances. Regulations governing permits are codified at 50 CFR part 17.32. With regard to threatened wildlife, a permit may be issued for the following purposes: Scientific research, enhancement of propagation or survival, zoological exhibition or education, incidental taking, or special purposes consistent with the Act. All such permits must also be consistent with the purposes and policy of the Act as required by section 10(d). Such a permit will be governed by the provisions of § 17.32 unless a special rule applicable to the wildlife (appearing in § 17.40 to § 17.48) provides otherwise.

Threatened species are generally covered by all prohibitions applicable to endangered species, under section 4(d) of the Act. The Secretary, however, may propose special rules if deemed necessary and advisable to provide for the conservation of the species. The special rule described here for § 17.42 allows commercial importation and re-exportation into/from the United States of certain farm-reared, ranch-reared, and wild-collected specimens of threatened caiman species, which are listed in CITES Appendix II. Importation could be restricted from a particular country of origin or re-export if that country is not complying with the CITES Universal Tagging System Resolution, or if that country has been identified as a subject to a recommended suspension of trade by the CITES Standing Committee or at a CITES Conference of the Parties. Interstate commerce within the United States and re-export of C. yacare, C. c. crocodilus, and C. c. fuscus parts will not require additional U.S. threatened species permits.

This rule revises § 17.11(h) to reclassify the C. yacare from endangered to threatened to reflect more accurately the present status of this species. The Apaporis River caiman ( C. c. apaporiensis ), the black caiman ( M. niger ), and the broad-snouted caiman ( C. latirostris ) retain their endangered status under the Act. Crocodylus crocodylus crocodilus and C. c. fuscus (including C. c. chiapasius ) are listed as threatened by reason of similarity in appearance. /-

Currently, listing of C. yacare in Appendix II of CITES allows commercial trade in the species. This special rule allows commercial importation and re-exportation into/from the United States of C. yacare skins, other parts, and products originating from countries effectively implementing the crocodilian CITES Universal Tagging System Resolution, and only from countries that have not been identified by the CITES Parties for inadequate implementation of CITES. The intent of this special rule is to enhance the conservation of the yacare caiman and the other endangered and threatened caiman populations by supporting those countries properly managing their caiman populations through the opening of commercial markets in the United States.

The degree of endangerment of crocodilian species varies by species and specific populations. Some caiman species are listed on Appendix I of CITES. Such listing prohibits international trade in the species if such activity is conducted for primarily commercial purposes and/or determined to be detrimental to the survival of the species. The remaining species and populations of caiman are included in Appendix II, thereby allowing commercial trade if certain scientific and management findings are made. Some caiman species are also listed as endangered in the U.S. List of Endangered and Threatened Wildlife, while other species are not included. In addition to the United States, several countries have taken domestic actions to protect wild caiman populations, but allow trade in specimens bred or raised in captivity under appropriate management programs.

We agree that yacare caiman populations in some range countries are being sufficiently managed through ranching or captive breeding programs to support controlled commercial use. However, the Service is concerned about: (1) The illegal harvest and inadequate trade controls for caiman species in Appendix II of CITES; (2) the commingling and misidentification of legal and illegal skins in intermediary trading, processing, and manufacturing countries; and (3) the sustainable management of the yacare caiman in those countries allowing a legal harvest of wild specimens.

The CITES Parties adopted at the 1994 Fort Lauderdale meeting (COP9) and are currently implementing pro isions of the Universal Tagging System Resolution for crocodilian skins (Resolution Conf. 9.22). The Service supports these efforts, including the most recent clarifications of the resolution resulting from the Animals Committee meeting held in September 1996. At the CITES meeting of the Conference of the Parties in Zimbabwe in 1997, the CITES Secretariat reported that, to its knowledge, all range countries were effectively implementing the Universal Tagging System Resolution. Adherence to the CITES tagging requirements has reduced the potential for substitution of illegal skins and reduced the trade control problems with the similarity of appearance of skins and products among different species of crocodilians.

In addition to the measures established by CITES in the Universal Tagging System Resolution, this special rule contains other steps designed to restrict or prohibit trade from countries that are not effectively implementing the CITES Universal Tagging System Resolution and, thus, to ensure that the United States does not become a market for illegal trade in crocodilian species and to encourage other nations to control illegal trade.

Consistent with the requirements of sections 3(3) and 4(d) of the Act, this rule also contains a special rule that amends 50 CFR 17.42 to allow commercial importation and re-exportation, under certain conditions, of whole and partial skins, other parts, and finished products from yacare caiman without a threatened species import permit otherwise required by 50 CFR part 17, if all requirements of the special rule and 50 CFR parts 13 (General Permits Procedures), 14 (Importation, Exportation, and Transportation of Wildlife), and 23 (Endangered Species Convention—CITES) are met.

The reclassification of C. yacare to “threatened” and the accompanying special rule allowing commercial trade into the United States without endangered species import permits does not end protection for this species, which remains on Appendix II of CITES. To the contrary, the special rule complements the CITES Universal Tagging System Resolution for crocodilian skins by allowing imports and re-exports only from those range countries properly managing this species and controlling exports, and only from those intermediary countries properly implementing the CITES Universal Tagging System Resolution. Thus, this special rule simply reconciles ESA requirements for the importation and exportation of C. yacare shipments into and from the United States with CITES ones.

The listing of C. c. fuscus and C. c. crocodilus as threatened by similarity of appearance, and the accompanying special rule allowing commercial trade into the United States, also will have no effect on the issuance of permits for the commercial importation and exportation of skins, other parts, and products of these two caiman subspecies into and from the United States. Since C. c. fuscus and C. c. crocodilus are currently listed in Appendix II of CITES, a CITES permit issued by the exporting or re- exporting country is already required for importation of shipments of these two subspecies into another country. This rule requires only that shipments involving skins and other parts of C. c. fuscus and C. c. crocodilus be tagged in accordance with the CITES Universal Tagging System Resolution and accompanied by valid CITES export documents, as is currently done. No U.S. import permits are required for these specimens. However, in the case of viable eggs or live specimens of C. c. fuscus and C. c. crocodilus into the United States, an Endangered Species Act import permit will be required in addition to the already required CITES export permit.

In summary, this special rule prohibits the importation and re-exportation of specimens (skins, other parts, or products) of C. caiman, C. c. crocodilus, and C. c. fuscus originating from any country (range country or a country of manufacture or re-export) that: (1) Is not effectively implementing the CITES Universal Tagging System Resolution including (but not limited to) the use of properly marked tamper-proof tags on all skins, the package of other crocodile parts in transparent sealed containers clearly marked with parts tags, the recording of the same information on the tags on the CITES documents, and maintenance of records accounting for transactions of skins, parts, and products; or (2) has failed to designate a Management Authority or Scientific Authority; or (3) have been identified by the Conference of the Parties to the Convention, the Convention's Standing Committee, or in a Notification from the Secretariat as a country from which Parties should not accept permits.

In a limited number of situations where the original tags from the country of export have been lost in processing the skins, we will allow whole skins, flanks, and chalecos into the United States if CITES-approved re-export tags have been attached in the same manner as the original tags and proper re-export certificates accompany the shipment. If a shipment contains more than 25 percent replacement tags, the re-exporting country must consult with the U.S. Office of Management Authority prior to clearance of the shipment, and such shipments may be seized, if the Service cannot determine that the requirements of the CITES Universal Tagging System Resolution have been observed.

In the case where tagged caiman skins are exported to another country for manufacturing purposes, and the finished products are re-exported to the United States, then neither the country of origin nor the country of re-export can be subject to a Notice of Information based on the criteria described in the special rule if imports are to be allowed. The Service will initially presume that intermediary countries are effectively implementing the CITES Universal Tagging System Resolution, but the special rule has provisions to impose bans if persuasive evidence to the contrary is presented.

Our Office of Management Authority will provide on request the list of those countries subject to a Schedule III Notice of Information to manufacturers in the country of re-export and to importers so that they may be advised of restrictions on caiman skins, products, and parts that can be utilized in products intended for U.S. commerce. The Management Authority of the country of manufacture should ensure that re-export certificates provided for manufactured goods intended for the United States are not for products and re-exports derived from countries subject to a Schedule III Notice of Information. In compliance with these rules, commerce in finished products from a re-export country would be allowed only with the required CITES documentation and without an endangered or threatened species permit for individual shipments otherwise required under 50 CFR part 17.

Finally, this special rule does not cover the importation of viable caiman eggs or live caimans into the United States. Importation of these two types of specimens will require an Endangered Species Act import permit and the appropriate CITES permit. This requirement will allow scrutiny of individual applications for importation of live caimans or eggs so as to prevent accidental introduction of these exotic species into the United States, which may have detrimental effects on U.S. native wildlife or ecosystems. Re-exportation from the United States of caiman skins, other parts, and products will continue to require CITES documents. Interstate commerce within the United States in legally imported caiman skins, other parts, and products will not require U.S. threatened species permits.

This special rule allows trade through intermediary countries. Countries are not considered as intermediary countries or countries of re-export if the specimens remain in Customs control while transiting or being transshipped through the country and provided those specimens have not entered into the commerce of that country. However, the CITES Universal Tagging System Resolution presupposes that countries of re-export have implemented a system for monitoring skins.

We wrote this special rule to allow the Service to respond quickly to changing situations that may result in lessened protection to crocodilians. The criteria described in the special rule establish specific, non-discretionary bases for determining whether CITES provisions are being effectively implemented. Therefore, by the publication of such notice in the Federal Register , we can deny approval of permits, and imports into the United States can be prohibited from any country that fails to comply with the requirements of the special rule.

In a separate rule-making proposal, amending 50 CFR part 23, the Service will propose implementation of the CITES Universal Tagging System Resolution for all crocodilians. That rulemaking will adopt CITES tags as the required tag for all crocodilian skins, including caiman chalecos and flanks, being imported into or exported from any country if the skin is eventually imported into the United States. For the reasons noted above, the Service finds that the special rule for caiman species, including the yacare caiman, includes all of the protection that is necessary and advisable to provide for the conservation of such species.

Requirements of the Act for the monitoring of species also apply to foreign species (see final rule “Endangered and Threatened Wildlife and Plants; Removal of Three Kangaroos From the List of Endangered and Threatened Wildlife” published in the Federal Register on March 9, 1995; 60 FR 12887). Monitoring programs are conducted to ensure that species continue to fare well after delisting or downlisting occurs. These monitoring programs frequently include population and species distribution surveys, assessment of the condition of important habitats for the species, and assessment of threats identified as relevant to the species.

The Service depends primarily on range countries to monitor C. yacare. To monitor the status of C. yacare, we will request the governments of the range countries (Argentina, Brazil, Paraguay, and Bolivia) wishing to export specimens of C. yacare to the United States for commercial purposes to provide us every two years, for the following 10 years, with the most recent information available on the status of the species, gathered by the respective range countries to fulfill their CITES scientific and management requirements. The first submission of status information is due on December 31, 2001. All information provided by the range countries will be available for public review.

For each country, the following information should be provided on the status of C. yacare:

(1) Recent distribution and population data, and a description of the methodology used to obtain such estimates;

(2) Description of research projects currently being conducted related to the biology of the above species in the wild, particularly their reproductive biology (for example, age or size when animals become sexually mature, number of clutches per season, number of eggs per clutch, survival of eggs, survival of hatchlings);

(3) Description of laws and programs regulating harvest of the above species, including approximate acreage of land set aside as natural reserves or national parks that provide protected habitat for the above species;

(4) Description of current sustainable harvest programs for the above species, including ranching ( i.e., captive-rearing of crocodiles collected from the wild as eggs or juveniles) and farming (captive-breeding of animals) programs;

(5) Current harvest quotas for wild populations; and

(6) Export data for the last 10 years (preferably organized according to origin of animals: wild-caught, captive-reared, and captive-bred).

This rule is not subject to review by the Office of Management and Budget under Executive Order 12866.

The Department of the Interior certifies that the special rule in § 17.42(g) will not have a significant economic effect on a substantial number of small entities, as defined under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) Most or all of the potential applicants who might take advantage of the procedures implemented through this special rule are individuals or small entities.

The special rule in § 17.42(g) does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million a year.

In accordance with Executive Order 12630, the special rule in § 17.42(g) does not have significant takings implications.

In accordance with Executive Order 13132, the special rule in § 17.42(g) does not have significant Federalism effects to warrant the preparation of a Federalism assessment.

In accordance with Executive Order 12988, the Office of the Solicitor has determined that this special rule in § 17.42(g) does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order.

The special rule in § 17.42(g) does require an information collection from 10 or more parties and, therefore, a submission under the Paperwork Reduction Act is required. The Office of Management and Budget approved the information collection requirements contained in this special rule under the Paperwork Reduction Act and assigned clearance number 1018-0093 as part of the permit requirements contained in Part 23 of Title 50.

The Service has determined that Environmental Assessments and Environmental Impact Statements, as defined under the authority of the National Environmental Policy Act of 1969, need not be prepared in connection with regulations adopted pursuant to section 4(a) of the Act of 1973, as amended. A notice outlining the Service's reasons for this determination was published in the Federal Register on October 25, 1983 (48 FR 49244).

The primary author of this rule is Dr. Javier Alvarez, Office of Scientific Authority, U.S. Fish and Wildlife Service, Washington, DC 20240 (703-358-1708 or FTS 921-1708).

The following changes to current management measures were recommended by the Pacific Fishery Management Council (Council), in consultation with the States of Washington, Oregon, and California, at its April 3-7, 2000, meeting in Portland, OR. Pacific coast groundfish landings will be monitored throughout the year, and further adjustments to the trip limits will be made as necessary to stay within the OYs and allocations announced in the annual specifications and management measures for the groundfish fishery, published in the Federal Register at 65 FR 221 (January 4, 2000), as amended at 65 FR 17805 (April 5, 2000).

The Council made a number of housekeeping recommendations that would remedy minor problems in the management measures that were implemented at the beginning of the year. (1) The trip limits for Pacific ocean perch (POP) were inadvertently applied coastwide even though POP south of 40°10′ N. lat. were already included in the trip limits for minor slope rockfish. This document clarifies that the trip limits for POP (line 5 in Tables 3, 4, and 5) apply only north of 40°10′ N. lat., South of 40°10′ N. lat., POP remains in the minor slope rockfish category. (2) Flag rockfish are not found north of 40°10′ N. lat., and in Table 2 are removed from the minor shelf rockfish category in that area. (3) New testimony from fishers revealed that red-banded rockfish are not caught on the continental shelf, but are taken in deeper waters. Consequently, red-banded rockfish, which is one of the minor rockfish species that occurs both north and south of 40°10′ N. lat., is moved from the shelf to the slope category in Table 2. These reassignments result in no change to the OYs or trip limits for any species or species group. Other provisions remain the same except as explained below.

The Council heard testimony that limited entry trawl fishers were encountering small amounts of flatfish, particularly English sole, when fishing with large footropes in deeper water on the continental slope. Current restrictions would have required the use of small footrope gear for landings of any flatfish except Dover and rex soles between May 1-October 31, 2000. (This provision also applies to petrale sole from March 1-April 30, 2000.) The Council recommended an incidental trip limit for other flatfish of 400 lb (181 kg) per trip for large footrope trawls between May and October so that unavoidable incidental catch would not have to be discarded. This amount is believed to be too small to encourage any target fishing for flatfish on the shelf with large footrope gear, which is discouraged due to the potential interception of depleted species. Dover and rex soles remain in the only flatfish species in the FMP that are not managed according to the size of the trawl footrope onboard; there continues to be no poundage limit on arrowtooth flounder, petrale sole, and other flatfish taken with small footrope trawls.

A new strategy for managing rockfish was implemented on January 1, 2000, which reduced the amount of rockfish available to nearshore commercial fisheries (65 FR 221, January 4, 2000, as amended). When the current limits were recommended by the Council in November 1999, there was a clear need to reduce landings significantly, but there was no way to anticipate reductions in participation. The best available information at the April Council meeting indicated that landings of rockfish through February 2000 were minimal. Although the commercial nontrawl fisheries are subject to a high degree of seasonality, it appears unlikely that the current limits would allow achievement of the nearshore rockfish limited entry and open access allocations. The Council recommended that cautious increases to the nearshore rockfish limits begin May 1, with further adjustments to be made later in the year as needed. Any increase runs some risk of accelerating the fisheries to the point where they would need to be closed before the end of the year, but the Council believed the risk to be preferable to continuing with limits that provide very little opportunity for profitable trips. Even with these increases, the trip limits for nearshore rockfish remain significantly lower than in recent years, and will not accommodate the needs of the entire open access fleet. The Council made the following recommendations:

For the limited entry nontrawl fishery north of 40°10′ N. lat., the nearshore minor rockfish trip limit is changed from 2,400 lb (1,089 kg) per 2 months, of which no more than 1,200 lb (544 kg) may be species other than black or blue rockfish, to 3,000 lb (1,361 kg) per 2 months, of which no more than 1,400 lb (635 kg) may be species other than black or blue rockfish.

For the limited entry nontrawl fishery south of 40°10′ N. lat., the nearshore minor rockfish trip limit is increased from 1,000 (454 kg) to 1,300 lb (590 kg) per 2-month period.

For the open access nontrawl fishery north of 40°10′ N. lat., the nearshore minor rockfish trip limit is increased from 1,000 lb (454 kg) per 2 months, of which no more than 500 lb (227 kg) per 2 months, of which no more than 700 lb (318 kg) may be species other than black or blue rockfish. In addition, special provisions were made for vessels landing in Pacific City, OR.

The Council heard testimony from two dory fishers from Pacific City, who stated that the limits were so low that vessels were not fishing and virtually no landings of groundfish had occurred so far this year. (Less than 200 lb (113 kg) of groundfish have been landed in Pacific City through March 30, 2000.) The dory representatives asked the Council to consider compressing their groundfish fishery into a 5-month season, from May 1 through September 30, 2000, after which no landings of groundfish would be allowed in Pacific City for the rest of the year. This could provide larger monthly cumulative limits when the season is open, at the expense of closing Pacific City to landings of groundfish for the rest of the year.

Pacific City is a small community, geographically isolated from the rest of the coast. The nearest ports with processing facilities are Garibaldi to the north and Newport to the south, both in Oregon. The higher limit and later closure would be linked to landing in Pacific City. There are no docks for offloading in Pacific City. Therefore, these limits are only available to small vessels that can land on the beach, and cannot be harvested by larger vessels that later can land in other areas. The Pacific City groundfish fleet consists entirely of open access dories, small vessels less than 25 feet (7.68 m) in length, that are launched from, and land on, the beach. These vessels are so small that they conduct only day trips near shore. This dory fleet consists of about 11 vessels of which half are active in the fishery. The groundfish taken by these vessels are almost entirely black and blue rockfish, predominantly black. Occasionally a dory fisher also participates in the salmon fishery. Alternative fisheries do not exist for the dory fleet in Pacific City.

The Council carefully considered the composition of the fleet, the inability of dories to participate in other fisheries, the geographical isolation and lack of port and processing facilities that would discourage other vessels from landing in Pacific City, and agreed to recommend a variation in the season and trip limit for this localized fleet. The Council recommended a cumulative trip limit of 2,200 lb (998 kg) per month from May 1 through September 30, after which no open access landings of groundfish may be made in Pacific City, even if taken in the salmon fishery. The amount of groundfish available during the year is intended to be no different than for open access fishers operating under a longer season and landing elsewhere along the coast. This action is consistent with the Council's intent “* * * to provide a continued opportunity to nearshore fishers to selectively harvest black and blue rockfish * * *” (65 FR 235, January 4, 2000).

For the open access nontrawl fishery south of 40°10′ N. lat., the nearshore minor rockfish trip limit is increased from 550 lb (249 kg) to 800 lb (363 kg) per 2-month period. Sablefish North of 35° N. lat.

Similarly, landing by the daily trip limit fisheries for sablefish taken with nontrawl gear north of 36° N. lat., were lower than expected through the end of February 2000, although close to 1999 levels. The Council recommended continuing the 300-lb (136-kg) daily trip limit, but increasing the cumulative amount that may be landed from 2,100 (953 kg) to 2,400 lb (1,089 kg) per 2-month period in both the limited entry and open access nontrawl sablefish fisheries.

At its June meeting in Portland, Oregon, the Council will make recommendations for the opening date, duration, and level of cumulative trip limits for the nontrawl, limited entry regular sablefish season.

The Spiny Dogfish Fishery Management Plan (FMP) was partially approved by NMFS on behalf of the Secretary of Commerce (Secretary) on September 29, 1999, and the final rule implementing the FMP was published on January 10, 2000, and initially scheduled to be effective on February 10, 2000. Included among the approved management measures in the FMP is a requirement that the Mid-Atlantic Fishery Management Council (Mid-Atlantic Council) and New England Fishery Management Council (New England Council) jointly develop annual specifications, which include a commercial quota to be allocated on a semi-annual basis, and other restrictions to assure that fishing mortality targets will not be exceeded. Both the Mid-Atlantic and New England Councils recommended a commercial quota specification and trip limits to achieve the FMP's objectives for fishing year 2000 at their respective meetings in November and December 1999. However, the Councils failed to reach agreement on a preferred commercial quota and trip limit measure for this action. While the Mid-Atlantic Council recommended a quota of 2.9 million lb (1,316 mt) and a trip limit of 300 lb (136 kg), the New England Council recommended a quota of 22 million lb (10,000 mt) and a trip limit of 7,000 lb (3,175 kg) for the first quota period and a trip limit of not more than 7,000 lb (3,175 kg) for the second quota period.

On February 10, 2000, NMFS, on behalf of the Secretary, delayed the effective date of the final rule for the FMP until March 15, 2000 (65 FR 7460, February 15, 2000), in order to provide the Councils with the opportunity to come to an agreement on how to proceed with implementation of the FMP. The effective date of the final rule was subsequently delayed until March 27, 2000, to provide additional time for the Councils to reconcile their differences. The Mid-Atlantic Council met on March 16, 2000 and voted to support its original recommendation for the specifications. The New England Council met on March 23, 2000 and voted to recommend a reduced quota of 14.3 million lb (6,500 mt) and a trip limit of 7,000 lb (3,175 kg) for both quota periods. The effective date of the final rule to implement the FMP was delayed again, until April 3, 2000, to provide additional time to consider options for the spiny dogfish specifications for the 2000 fishing year. As a result of the Councils' inability to reach agreement, NMFS, on behalf of the Secretary, is issuing this rule establishing a quota and trip limits for fishing year 2000 under its interim authority.

The FMP specifies that a fishing mortality rate (F) of 0.03 on female spiny dogfish is required for the 3-year period from May 1, 2000, through April 30, 2003, to end overfishing on spiny dogfish. The FMP further specifies that the commercial quota be subdivided into two semi-annual quota periods as follows: The period from May 1 through October 31 (quota period 1) is allocated 57.9 percent of the annual quota, and the period from November 1 through April 30 (quota period 2) is allocated 42.1 percent of the annual quota. The current F on female spiny dogfish has been recently estimated to be approximately 0.42, indicating that severe overfishing is occurring. If overfishing is occurring in a fishery, section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) provides that the Secretary may implement interim measures necessary to address overfishing. The quota and management measures in this interim final rule particularly address the overfishing that is occurring on females in the spiny dogfish fishery. This is an immediate problem that will become more serious if implementation of management measures to end overfishing is delayed beyond the start of the fishing year on May 1, 2000.

This interim final rule implements 2000 specifications for the spiny dogfish fishery, including a total quota of 4.5 million lb (2,041 mt), of which 4 million lb (1,814 mt) is allocated to the commercial fishery and 500,000 lb (226.7 mt) as a set-aside for spiny dogfish exempted fishing projects. Quota period 1 is allocated 57.9 percent, or 2,316,000 lb (1,050 mt), of the commercial quota, and quota period 2 is allocated 42.1 percent, or 1,684,000 lb (764 mt), of the commercial quota. In addition, this interim final rule establishes seasonal spiny dogfish trip limits of 600 lb (272 kg) for quota period 1, and 300 lb (136 kg) for quota period 2. The measures are necessary to end overfishing and to achieve the target F of 0.03 for fishing year 2000.

The spiny dogfish exempted fishing quota set-aside of 500,000 lb (226.7 mt) will be allocated to vessels participating in projects designed to improve selectivity of spiny dogfish fishing gear and methods. The primary goal in providing this incentive for such projects is to investigate ways to shift fishing effort away from female spiny dogfish, which in turn would help to rebuild the female portion of the stock and provide greater balance in terms of the ratio in the stock of females to males. In addition, spiny dogfish gear-selectivity studies could improve current information on the species, including bycatch and discard mortality. Interested parties are required to submit proposals pursuant to the provisions for experimental fishing under 50 CFR 648.12, and the provisions for exempted fishing set forth in 50 CFR 600.745.

There is uncertainty and variability in the population estimates for spiny dogfish. While landings associated with the mean estimated population size would be 2.9 million lb (1,316 mt) with a fishing mortality rate of F = 0.03, a range of populations, considering uncertainty in the estimates, would result in landings of approximately 1.7 million lb (771 mt) to 4.5 million lb (2,041 mt) with a fishing mortality rate of F = 0.03. Uncertainty in the population estimates therefore indicate that a 2000 fishing year quota of 4.5 million lb (2,041 mt), which is higher than that recommended in the FMP, could still achieve an F of 0.03, although at a reduced probability. The trip limits contained in this rule are probably low enough to end the directed fishery for spiny dogfish and improve the likelihood that the measures will achieve an F of 0.03. This is because vessel operators are likely to avoid spiny dogfish. Although discarding of spiny dogfish would likely continue in the non-directed fisheries, it is not expected to cause negative impacts that have not already been considered in the FMP. The spiny dogfish exempted fishing quota set-aside of 500,000 lb (226.7 mt) is not expected to impact negatively the goals of the FMP. Projects would be developed to investigate ways to avoid catch and discards of female spiny dogfish. The effect of the projects on female dogfish will depend on the degree of targeting that occurs and the survival rate of discarded female dogfish. Both aspects will be important to consider and to measure during the projects.

The trip limits for quota periods 1 and 2 will probably eliminate the directed fishery, and they are likely to have similar impacts on spiny dogfish trips during the respective quota periods, based on an analysis of recent NMFS landings data. Trip limits of 300 lb (136 kg) during quota period 2 and 600 lb (272 kg) during quota period 1, will each impact approximately 67 percent of trips after which spiny dogfish are landed.

An analysis of the trip limits examined the expected reduction in the regulatory discards of spiny dogfish based on economic decisions of vessel owners when faced with the subject trip limits. This analysis indicates that trip limits, in combination with a low commercial quota, will produce a high level of regulatory discards because spiny dogfish are caught in nearly all major fisheries in the region. However, the goal of the FMP and the 2000 specifications is to eliminate the directed fishery in order to meet the F of 0.03 target. According to the FMP, high discards are also associated with the directed spiny dogfish fishery because the spiny dogfish landed in this fishery are primarily large females; smaller spiny dogfish are usually discarded. Thus, providing for a low trip limit that eliminates the directed fishery should decrease the mortality on female spiny dogfish. In addition, since dogfish is a low value species that is difficult to handle onboard vessels, the projection of spiny dogfish discards in the trip limit analyses is presumed to be overestimated; vessel owners are expected to make efforts to avoid spiny dogfish while targeting other species because of the effort associated with discarding them.

The Mid-Atlantic Council recommended a commercial quota of 2,901,254 lb (1,316 mt) and a trip limit of 300 lb (136 kg) for both quota periods. The Mid-Atlantic Council's rationale for its recommendation is as follows: (1) The commercial quota associated with the F = 0.03 target for fishing year 2000 (as specified in the FMP) is 2,901,254 lb (1,316 mt); (2) a trip limit of 300 lb (136 kg) is expected to produce, on average, the level of landings specified in the FMP during the rebuilding period to achieve an F of 0.03; (3) the intent of the FMP is to close the directed fishery for adult female spiny dogfish after year one of the rebuilding period and allow for the landing of incidental catch of spiny dogfish only during the rebuilding period; and (4) these restrictions will prevent a derby fishery and allow for a more equitable distribution of landings in time and space. The Mid-Atlantic Council submitted to NMFS a proposed rule to implement its recommendations; however, that proposed rule was not published in the Federal Register .

The New England Council initially recommended a commercial quota of 22,059,228 lb (10,006 mt) and a trip limit of 7,000 lb (3,175 kg) for quota period 1 and a trip limit of not more than 7,000 lb (3,175 kg) for quota period 2. The New England Council reasoned that the higher commercial quota, combined with a high trip limit, would allow the directed fishery to operate for another year. The New England Council believed that a commercial quota of 22,059,228 lb (10,006 mt) would provide for as much as a 50-percent reduction of landings from 1990 to 1997 levels. Initially, the New England Council was concerned that discarding of spiny dogfish would overwhelm stock rebuilding goals and that the directed fishery should be maintained while the Councils determine the appropriate rebuilding target and management measures to control discarding. After reconsidering their recommendation at the request of the Secretary, the New England Council supported a quota of 14.3 million lb (6,486 mt), which the New England Council believed would end overfishing and allow a limited fishery to continue. The New England Council felt that a trip limit of 7,000 lb (3,175 kg) would not encourage a directed fishery but would instead allow vessels to land dogfish that would have been discarded. When combined with discards of spiny dogfish in other fisheries, the New England Council argued that the discards associated with a low trip limit would undermine the goals of the FMP.

NMFS prepared an analysis of economic impacts on small entities was prepared for this interim final rule. It analyzes impacts of measures in this interim final rule and incorporates information contained in an initial regulatory flexibility analysis prepared by the Mid-Atlantic Council for the initial proposed rule submission.

The reasons why this action was considered and is being taken by NMFS by interim final rulemaking are described elsewhere in the preamble. Likewise, the objectives and the legal basis for this interim final rule are covered earlier in the preamble.

The small entities considered in the analysis include 512 vessels that have reported spiny dogfish landings to NMFS. Vessels that did not have a Federal fishery permit in 1998, such as vessels that fish in state waters only, were not included in the analysis. Although it is likely that the measures would have some impact on the activity of these vessels, should their owners choose to acquire a Federal spiny dogfish permit, the magnitude of this impact could not be determined.

There are no new reporting or recordkeeping requirements contained in the preferred alternative or any of the other alternatives that were considered for this action. No relevant Federal rules are known to duplicate, overlap or conflict with the measures contained in this interim final rule.

The 500,000-lb portion of the 4.5-million lb quota is established to minimize the economic effects of the quota without compromising the objective of the FMP to begin rebuilding the spiny dogfish stock, especially the adult female portion.

Analysis of the action considers a preferred alternative having a commercial quota of 4 million lb (1,814 mt), and trip limits of 600 lb (272 kg) in quota period 1 and 300 lb (136 kg) in quota period 2. Economic impacts on small entities are also analyzed under four alternative options: (1) a commercial quota of 2,901,254 lb (1,316 mt) and a trip limit of 300 lb (136 kg) for both quota periods (Mid-Atlantic Council Option); (2) a commercial quota of 22,059,228 lb (10,006 mt) and a trip limit of 7,000 lb (3,175 kg) for quota period 1 and up to 7,000 lb (3,175 kg) for quota period 2 (the New England Council's original recommendation); (3) a commercial quota of 2,901,254 lb (1,316 mt), trip limits of 600 lb (272 kg) for quota period 1 and 300 lb (136 kg) for quota period 2; and (4) a no action alternative.

A large portion of affected vessels identified in the analysis would likely experience revenue losses under any of the options. Under the no action alternative, with no quota or management measures, the FMP projects that landings of spiny dogfish would decrease approximately 50 percent from 1998 levels to 25.5 million lb (11,576 mt) in fishing year 2000, due to continued declines in stock size as the result of overfishing. The analysis projects that this reduction in spiny dogfish landings from 1998 levels would result in lower revenues for a large portion of the industry. Of the four options, the Mid-Atlantic Council's option would have the greatest negative economic impact on vessels.

An analysis was conducted for the trip limits of 600 lb (272 kg) and 300 lb (136 kg) based on possible economic decisions of vessel owners during spiny dogfish trips. The trip limit analysis includes estimates of the reduction in the number of trips, the level of landings during the quota period and projected closure dates of the quota periods. The analysis projected that, on average, under a trip limit of 600 lb (272 kg) for quota period 1, landings will exceed the semi-annual quota of 2,316,000 lb (1,050 mt) on about September 5, 2000 (128 days into the quota period). During quota period 2, however, if a 300-lb trip limit was in effect, landings were projected not to exceed the semi-annual quota of 1,684,000 lb (764 mt). The analysis projected landings of only 615,000 lb (279 mt) during quota period 2. Thus, approximately 1,069,000 lb (485 mt) of allowable spiny dogfish landings were projected not to be landed. Although the commercial quota is 4 million lb (1,814 mt), total projected landings are projected to reach only 2,930,000 lb (1,329 mt). However, the analysis does not account for behavioral changes by vessel operators, which could impact the amount of landings. Also, since vessels without Federal permits are not captured in the analysis, additional landings are likely to occur. In comparison to the Mid-Atlantic Council option, the impact on small entities is less severe.

Based on the economic analysis of the trip limit for quota period 1, and considering a commercial quota of 2,901,254 lb (1,316 mt), trip limits of 300 lb (136 kg), 600 lb (272 kg), and 7,000 lb (3,175 kg) are estimated to eliminate approximately 28 percent, 26 percent and 28 percent, respectively, of fishing trips after which spiny dogfish are landed. While some impacted vessels would continue to make trips and land only up to the trip limits, a portion of the impacted trips, i.e. 28 percent, 26 percent and 28 percent of trips under trip limits of 300 lb (136 kg), 600 lb (272 kg) and 7,000 lb (3,175 kg), respectively, in quota period 1, would cease because the trip limit would not provide for profitable trips. The number of trips that are eliminated under a 7,000-lb trip limit increase because the length of the season under the high trip limit would be significantly reduced. Dogfish sell at around 16 cents per pound. It is possible that the effort from the eliminated spiny dogfish trips could move into other fisheries where vessels may make up for the lost revenue. However, it is not clear at what level this would occur or how much additional revenue it would create for the vessels.

Although more vessels would find it profitable to land spiny dogfish under a trip limit of 7,000 lb (3,175 kg) while the season is open, a trip limit of 7,000 lb (3,175 kg) would not meet the objectives of the FMP because it would not end the directed fishery. Vessels may still be able to make profitable trips by directing on other species and landing up to the trip limit of 600 lb (272 kg) or 300 lb (136 kg) of spiny dogfish. Revenues from spiny dogfish alone would be minimal, but the lower trip limits will likely end the directed fishery and be consistent with the FMP. If major spiny dogfish markets are eliminated as a result of low supply due to a low trip limit or quick closure of the fishery, much of the revenue from the spiny dogfish fishery would also be drastically reduced.

The spiny dogfish exempted fishing quota set-aside of 500,000 lb (226.7 mt) will provide additional revenue for participating vessels, although the level cannot be determined without an estimate of the number of vessels that would participate in the exempted fishing projects. In addition, it is likely that research organizations may provide additional funding as compensation for the use of the vessels in the projects.

The impact of the annual specifications for 2000 contained in this interim final rule will be greatest in Massachusetts, North Carolina, Maryland, Maine and New Jersey, which account cumulatively for 90 percent of spiny dogfish landings from 1988 through 1997. Further, the communities of Wachapreague, VA; Plymouth, MA; and Scituate, MA, have benefitted from dogfish landings that made up 76 percent, 76 percent, and 21 percent, respectively, of the value of all landed fish, based on 1997 NMFS landings data. Communities such as these, and others that have relatively high income from dogfish landings compared to landings of other species, will be most impacted by the commercial quota and trip limit in the specifications. The analysis also concludes that small vessels (25 to 49 ft (7.6 to 14.9 m)), which constitute 88 percent of the affected vessels, would be particularly impacted under any option. However, if no action is taken, communities benefitting from dogfish landings would experience greater lost revenues in the long term due to stock collapse as a result of the directed fishery. Long-term benefits to the stocks and revenues resulting from rebuilt stocks are expected to outweigh the short-term negative impacts to the sectors of the fishing industry that have utilized the spiny dogfish resource.

Following is a summary of the impacts that would be expected by implementing the alternatives that were considered by the Councils.

The Mid-Atlantic Council recommended a commercial quota of 2,901,254 lb (1,316 mt) and a trip limit of 300 lb (136 kg) for both quota periods during fishing year 2000. Based on the analyses, the Mid-Atlantic Council option would result in the greatest reduction in revenues of the options considered. The only difference between the Mid-Atlantic Council's trip limit recommendation and the action in this interim final rule is that the trip limit for quota period 1 under the Mid-Atlantic Council option would be 300 lb (136 kg), rather than 600 lb (272 kg) in this interim final rule. With a trip limit of 300 lb (136 kg) for quota period 2, the quota would not be expected to be exceeded and the fishery would not close, although revenues per trip would be small due to the low trip limit and low value of spiny dogfish. The lower trip limit would be more likely to cause immediate loss of spiny dogfish markets as a result of low supply. The revenue losses associated with a trip limit of 300 lb (136 kg) in quota period 1 is expected to be higher than those associated with a trip limit of 600 lb (272 kg).

The New England Council recommended a quota of 22,059,228 lb (10,006 mt) for fishing year 2000 and a trip limit of 7,000 lb (3,175 kg) in quota period 1 and up to 7,000 lb (3,175 kg) in quota period 2. The higher commercial quota would provide for a directed fishery for spiny dogfish that would likely last for the majority of the quota periods, thus providing vessels the ability to sell spiny dogfish for a longer period of time. Further, the higher trip limits would allow higher per trip revenues from spiny dogfish and would reduce regulatory discards. However, even under this option, a large number of vessels would likely still suffer revenue losses compared to 1998 revenues because stock abundance has declined. The New England Council's recommended quota would likely result in fishing mortality approaching an F of 0.3, thus well exceeding the target F of 0.03, and the high trip limit would encourage directed spiny dogfish fishing, both of which are counter to the objectives of the FMP. Further, long-term revenues to participants in the fishery would likely be reduced due to future reductions in landings that could be required due to overfishing caused by directed fishing on spiny dogfish.

The trip limit analysis was not applied to the New England Council's more recent quota recommendation of a 14,300,000 lb (6,500 mt) and trip limit of 7,000 lb (3,175 kg), but the economic impacts would be greater than those associated with the Council's original recommendation of a quota of 22,059,228 lb (10,006 mt) and trip limit of 7,000 lb (3,175 kg). Because of the lower quota, the fishery would close earlier and more vessels would experience revenue losses due to the closure.

Under the no action alternative, the spiny dogfish fishery would remain unregulated and fishing mortality could be expected to remain at or near an F of 0.43, consistent with current projected fishing mortality. With no restrictions, the FMP projects that landings would decline to about 25.5 million lb (11,576 mt) in fishing year 2000 due to continued reductions in the stock size. Revenues would decline due to the projected 41 percent reduction in landings.

The Assistant Administrator for Fisheries, NOAA (AA), finds that it would be impracticable and contrary to the public interest to provide prior notice of and opportunity for public comment on this action. These measures must be in place by May 1, 2000, the start of the fishing year. Any delay in preventing overfishing increases the likelihood of a loss of long-term productivity of the spiny dogfish resource and increases the probability that more severe restrictions would be needed in the future. Therefore, the AA finds good cause under 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment.

Similarly, it is in the public interest to implement these measures by the beginning of the next fishing year (May 1, 2000) in order to prevent overfishing and reduce the likelihood of long term productivity losses and more severe restrictions in the future. Therefore, the AA finds good cause under 5 U.S.C. 553(d)(3) not to delay for 30 days the effectiveness of this interim final rule.

This interim final rule has been determined to be significant for the purposes of E.O. 12866.

Because prior notice and opportunity for public comment are not required for this interim final rule by 5 U.S.C. 553, or any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq ., are inapplicable. Nevertheless, NMFS prepared an economic analysis as part of the regulatory impact review, which describes the impact this interim final rule will have on small entities. This economic analysis is described in the Supplementary Information section of the preamble to this interim final rule.

The President has directed Federal agencies to use plain language in their communications with the public, including regulations. To comply with this directive, we seek public comment on any ambiguity or unnecessary complexity arising from the language used in this interim final rule.

For the reasons stated in the preamble, 50 CFR part 648 is amended as follows: