FHFA invites comment on all aspects of the proposed rule and will take all comments into consideration before issuing a final rule. Copies of all comments will be posted without change, including any personal information you provide, such as your name and address, on the FHFA Internet Web site at http://www.fhfa.gov. In addition, copies of all comments received will be available for examination by the public on business days between the hours of 10 a.m. and 3 p.m. at the Federal Housing Finance Agency, 1700 G Street, NW., Washington, DC 20552. To make an appointment to inspect comments, please call the Office of General Counsel at (202) 414-6924.

FHFA is an independent agency of the Federal government and was established by the Housing and Economic Recovery Act of 2008 (“HERA”), Public Law 110-289, 122 Stat. 2654, to regulate and oversee the regulated entities. 1 HERA amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq. ) (“Safety and Soundness Act”) and the Federal Home Loan Bank Act (12 U.S.C. 1421 through 1449) (“Bank Act”) to enhance the authorities and responsibilities of the new agency. FHFA's regulatory mission is to ensure, among other things, that each of the regulated entities “operates in a safe and sound manner” and that their “operations and activities * * * foster liquid, efficient, competitive, and resilient national housing finance markets.” (12 U.S.C. 4513(a)(1)(B))

FHFA issued a proposed guidance on private transfer fees for comment on August 16, 2010 (75 FR 49932) and requested public comments during a 60-day public comment period that ended on October 15, 2010. FHFA received several thousand comments on the proposed guidance and has decided to address the subject by regulation rather than through guidance.

FHFA's proposed guidance stated that the Enterprises should not purchase or invest in mortgages on properties encumbered by private transfer fee covenants or securities backed by such mortgages, as such investments would be unsafe and unsound and contrary to the public missions of the Enterprises and the Banks. Likewise, the proposed guidance stated that the Banks should not purchase or invest in such mortgages or securities or hold them as collateral for advances.

As described in the guidance, private transfer fee covenants may be attached to real property by the owner or another private party—frequently, the property developer—and provide for a transfer fee to be paid to an identified third party—such as the developer or its trustee—upon each resale of the property. The fee typically is stated as a fixed amount or as a percentage, such as one percent of the property's sales price, and often exists for a period of ninety-nine (99) years.

The proposed guidance noted that a number of States have either enacted, or are in the process of enacting, legislation to regulate private transfer fee covenants. In California, private transfer fee covenants are permitted, provided that they are properly recorded and contain certain disclosures. 2 Other States, such as Minnesota, 3 Delaware, 4 North Carolina 5 and Hawaii, 6 prohibit private transfer fee covenants that require payment to private third parties ( e.g., for-profit companies), but permit these covenants when the fees are paid to homeowners' associations, condominiums, cooperatives, and similar organizations that use the fees to directly benefit the properties encumbered by the covenants.

Legislation was introduced in the 111th U.S. Congress—H.R. 6260, “Homeowner Equity Protection Act of 2010” and H.R. 6332, “Homebuyer Enhanced Fee Disclosure Act of 2010”—to address the issue of private transfer fee covenants.

H.R. 6260 would have banned private transfer fees, with exceptions such as those payable to homeowners' associations. H.R. 6332 would have permitted them, subject to notice and recordation requirements.

In response to questions at congressional hearings, FHFA expressed concerns that private transfer fees may be used to fund purely private continuous streams of income for select market participants either directly or through securitized investment vehicles, and may not benefit homeowners or the properties involved.

FHFA also expressed concerns about the adequacy of disclosure of these private transfer fee covenants which, in turn, may impede the transferability of property and affect its overall marketability. This can impact the valuation and marketability of the encumbered property. Consumers may also be unaware that a fee applies even if the resale price of their home drops below the original purchase price.

FHFA received over 4,210 comment letters from a broad spectrum of individuals and organizations, including the Community Associations Institute; American Land Title Association (“ALTA”); National Association of Realtors; Freehold Capital; American College of Real Estate Lawyers; Institute of Real Estate Management; Coalition to Stop Wall Street Home Resale Fees; Sierra Club; numerous State and regional real estate agent associations; real estate companies; numerous homeowners', cooperative, and condominium associations, and individuals living within such associations; community associations and other nonprofit organizations; conservation funds and land trusts and foundations; housing and conservation boards; State housing and community development agencies; State natural resources agencies; developers; builders; appraisers; accountants; title companies; several Banks; members of the U.S. House of Representatives; State Governors; law firms (writing on their own behalf and on behalf of their clients); and other individuals and organizations who wrote to express a wide range of views on private transfer fee covenants.

Comments generally fell into five categories: (1) Commenters advocating a complete ban on private transfer fees; (2) commenters advocating for private transfer fees for condominiums, cooperatives, and homeowners associations; (3) commenters advocating for private transfer fees for section 501(c)(3) or (c)(4) nonprofit associations that provide activities that directly benefit the encumbered property; (4) commenters advocating for private transfer fees for general welfare purposes, even if they do not directly benefit the encumbered property; and (5) commenters who supported the payment of such fees to for-profit entities and also supported the securitization and sale of transfer-fee income streams to investors.

Commenters supporting a complete ban on private transfer fee covenants included many local real estate agent associations and private citizens. The real estate agent associations generally argued that the fees increase the cost of homeownership, generating revenue for developers or investors while providing no benefits to homebuyers over time.

Further, these commenters stated that there are few binding requirements for fee disclosures to homebuyers and to homeowners and that disclosure of fees at the time of closing adds undesirable complexity to real estate transactions. The commenters argued that the fees do not correlate with any tangible benefit received by the homebuyer and place an inappropriate burden on the transfer of property.

Several individuals submitted comment letters indicating private transfer fees were a “scam” against homeowners, robbing them of their equity. Many asserted that the U.S. Department of Housing and Urban Development's (“HUD's”) General Counsel had opined that private transfer fees violate HUD's regulations that prohibit legal restrictions on conveyance and require lenders to convey clear and marketable title. 7

The American Land Title Association (ALTA) raised concerns about private transfer fees, commenting that there is little uniform regulation over their use, with some States prohibiting their use, while others allow such fees with adequate notice and disclosure. ALTA also noted that courts and State legislatures generally do not favor restrictions on the ability of owners to sell real property. The association stated that private transfer fees could be viewed by courts and State legislatures as impairing the marketability and transferability of real property, and as an unreasonable restraint on alienation of property—regardless of the duration of the covenants or the amount of the transfer fees.

Many homeowners' associations, condominiums, and cooperatives with properties subject to private transfer fee covenants commented that the final guidance should be crafted to allow private transfer fees to these associations.

These commenters maintained that private transfer fees fund the capital reserves of their buildings or communities and help to fund critical and necessary capital improvements, upgrades and major repairs. They noted that these improvements increase property values, result in lower regular association dues and create more desirable communities. The commenters asserted that restrictions on these private transfer fees would affect the overall affordability of units by causing owners to raise building reserves through special assessments, through higher monthly fees or by a reduction in services, or by a combination of the alternatives.

Several of the Federal Home Loan Banks commenting agreed that private transfer fee covenants can serve a beneficial purpose when those fees are used for capital improvements and repairs. Several of these commenters stated that buildings that have incorporated a private transfer fee will benefit significantly over those that rely on maintenance from tenant shareholders or rental from commercial units. They also asserted that private transfer fees provide a stable reserve fund by insulating owners from large and immediate costs associated with longer term repair projects.

Other commenters argued that homeowner association private transfer fees are fully disclosed and are at most two or three months of dues or a flat fee from as low as $500.

Many commenters proposed that FHFA except from the final guidance transfer fees paid to nonprofit corporations with tax-exempt status under Internal Revenue Code (“Code”) sections 501(c)(3), 501(c)(4) or 528 where the fees are targeted to social welfare purposes, environmental purposes, civic betterment and social improvements or to “sustain the real estate infrastructure.”  8 These commenters asserted that certain not-for-profit organizations play important roles by supporting the creation and maintenance of community enhancements such as open space, environmental conservation and preservation, affordable housing and transit improvements. Several individuals, associations and nonprofit organizations described their own experiences with private transfer fees and how these fees have provided them with both direct and indirect benefits by improving their communities and their quality-of-life.

For example, one nonprofit organization stated that the private transfer fees it collects are disclosed on the good-faith estimate and argued that the fees support “land preservation, agriculture, energy efficiency, green building, walkability, high density building, arts and culture, and community living” for the residents of the community with which the organization is associated.

A number of commenters urged FHFA to except from the final guidance government agencies and other government entities that partner with nonprofits and collect private transfer fees to grow and maintain the affordable housing stock. Other commenters not only shared these views, but also supported the use of private transfer fees in city and State redevelopment efforts, arguing that these efforts were adversely affected by the economic downturn and the resulting reductions in Federal, State and municipal funding.

Some commenters argued that private transfer fees should be allowed for 501(c)(3) nonprofits that collect the fees and then acquire open-space land in the immediate area of a project. Other commenters extended this argument to environmental mitigation, the preservation of sustainable building programs, the protection of wildlife habitats, and the funding for workforce housing programs. These commenters uniformly argued that private transfer fees in this context were a community benefit. 9

Some commenters supported uses for private transfer fees that fund community organizations such as cultural centers or parks and community centers. These commenters argued that private transfer fee arrangements are sometimes created when developers build community centers and then transfer ownership of the center to a 501(c)(3) organization that uses the private transfer fees to fund its mission by providing and maintaining community services to the homeowner and community. They maintained that these practices make the homeowner's home more valuable because of the services.

A number of commenters, including some developers and builders, opposed FHFA's proposed guidance on private transfer fee covenants. These commenters contended that private transfer fees confer the same benefits, and raise the same objections, whether viewed in the context of homeowner associations, apartment cooperatives, nonprofit entities or private for-profit groups.

In addition, these commenters advocated for private transfer fees benefitting developers and related parties. One promoter referred to this type of private transfer fee as “capital recovery fees,” implying that the fees recover part of the developer's investment in a given project—an amount in addition to the sales price of the houses in the development.

Proponents of developer transfer fees argued that they lower the cost of construction and development. Under this model, a security would be created, backed by the future stream of transfer-fee payments by future buyers of a house. The value of the security, which would only be realized by the developer at the time of its original investment if the security were sold, is argued to offset up-front infrastructure costs, which would otherwise be captured in initial house sale prices.

In this manner, proponents claim private transfer fees spread development costs over all those who benefit; that is, for the next 99 years, subsequent purchasers of the developers' homes would absorb these costs by paying transfer fees to the developer or any other holder of the related security. On the premise that the present value of the transfer-fee revenue stream supplements the sale price of the developer's new houses, proponents claim that private transfer fees can reduce the developer's negative equity in some developments which have suffered declines in value, thereby assisting in restarting failed development projects and creating jobs.

In response to FHFA's expressed concerns about lack of transparency of private transfer fee covenants, transfer-fee advocates indicate that they support State legislative and regulatory efforts, and private initiatives, to ensure disclosure that is meaningful to future home buyers.

In the proposed guidance, FHFA expressed concern that the typical private transfer fee of one percent was neither minimal nor reasonable, and that the fees were likely not related to the value rendered by the property owner or community. Further, there is an issue of whether the fees are limited to one percent or may be raised by individual developers or securitization firms. In response to this concern, FHFA received a few comments stating that the marketplace does not consider the proportion of the fee relative to the purpose for which it is collected and, therefore, FHFA should not consider the level of the fee. Some commenters also argued that asking the regulated entities to ensure fees were proportional with rendered value would increase costs, including accounting and legal costs.

Each of the nine Banks that submitted comment letters expressed concern about their ability to comply with the final guidance, which would ask them to ensure that mortgage loans on properties with private transfer fees, and securities backed by such mortgage loans, are not purchased or accepted as collateral. The Banks expressed concerns about their ability to access underlying loan documentation, especially in cases in which they take a blanket lien on member assets, and about the availability of information on the presence of private transfer fee covenants.

Some of the Banks suggested that they could inform their members that such loans may not be pledged as collateral, require enhanced member certifications, and conduct reasonable assessments of loans during on-site reviews.

Several commenters raised concerns about retroactively applying the final guidance to previously originated loans because, they argued, attempts to discover the presence of private transfer fee covenants would pose significant operational challenges. These commenters argued that compliance under most circumstances would be, at best, difficult and, at worst, impossible, because of the added operational complexity it would require on real estate title searches.

Some commenters objected that a retroactive application of the final guidance would effectively render current loans with private transfer fees unmarketable, which would affect both current owners and prospective homebuyers. These commenters argued that retroactivity of the final guidance would impose economic hardship to consumers who should not be subject to rules of which they were unaware at the time of their original purchase.

Similarly, another commenter argued that the final guidance would effectively prohibit sellers from selling their homes, because lending institutions would not finance such purchases for fear these loans would be ineligible for secondary market execution.

Other commenters recommended that the final guidance be applied prospectively, with an effective date of 120 days from the date of issuance. They argued that market participants would require some time to make any necessary operational changes. One Bank requested that members be allowed to pledge loans as collateral if those loans were already acquired by its members prior to the issuance of the final guidance. Another Bank proposed that member institutions be allowed to provide an indemnification to the Bank for a breach, thus avoiding a put-back of the asset.

Another Bank commented that, since the Enterprises could be expected to comply with the final guidance prospectively, Enterprise mortgage-backed securities (“MBS”) should be exempt from any investment or collateral prohibitions contained in the final guidance.

After reviewing comments on the proposed guidance, FHFA has decided to publish a proposed rule for comment, with a number of changes to the substance of the former proposed guidance. While FHFA's proposed guidance advised the Enterprises and the Banks not to purchase, or accept as collateral for advances mortgages on property subject to any private transfer fee covenants, FHFA has determined to propose a rule with a narrower focus. FHFA's responses to the comments it received, and the changes included in this proposed rule, are described below. In summary, the principal differences between the proposed guidance and the proposed rule are:

• FHFA proposes to except from the rule private transfer fees that are paid to homeowners' associations and similar associations, and to tax-exempt non-profit organizations, where the fees are used for the direct benefit of the encumbered properties.

• FHFA proposes to make the rule prospective in effect, so that it applies to private transfer fee covenants created after the publication date of this proposed rule.

• FHFA allows an implementation period of 120 days for the regulated entities. The regulated entities may use reasonable means to achieve compliance with this rule.

FHFA is including a number of definitions in the proposed rule to clarify terms, and to identify the scope of the proposed rule's coverage. These definitions include, among others: “adjacent or contiguous property”; “covered association”; “direct benefit”; and “private transfer fee covenant.” FHFA requests comment on the content of these definitions, because of the role they play in establishing the scope of the rule's restrictions. For example, the rule would permit the regulated entities to do business in encumbered mortgages when the private transfer fees are paid to a “covered association” and provide a “direct benefit” to the encumbered properties; definitions, therefore, are of significance to market participants. In sum, “covered associations” are defined as homeowners' and similar associations, and tax-exempt non-profit organizations; “direct benefit” is generally defined to include maintenance, improvements, and amenities benefiting the encumbered properties or adjacent properties.

In considering the scope of this proposed rule, FHFA took into account the many public comments received on the August 16, 2010 proposed guidance. One set of commenters stated: “Consumers are essentially forced to pay for the right to sell their property.” If the fee is not paid, it results in a lien on the property impairing its marketability. This implicates the public policy against restraints on alienation as well as the mission of government-sponsored enterprises to foster “liquid, efficient, competitive, and resilient national housing markets.”  10

Because it is difficult to value the burden of a private transfer fee, it is also difficult to value the property that it encumbers and hence the value of that property as collateral for the mortgage loans that the Banks accept as collateral, and that the regulated entities buy, or that back the mortgage-backed securities that the Enterprises guarantee. This is a safety and soundness concern, and is a substantial motivation for FHFA to take action in the form of this rulemaking. In FHFA's view, the purposes for which private transfer fees are imposed are unrelated to the transfer of the property. The transfer is simply an opportunity for the beneficiary of the fee to collect it, imposing a “toll gate” that must be passed before the transfer may occur. While the purposes asserted for these fees—construction of community improvements, upkeep of community amenities, etc. —are more logically built into the purchase price of the house (in the case of initial construction) or regularly recurring fees (in the case of upkeep) and using the property transfer as the vehicle for collecting the fee may constitute a restraint on alienation, nevertheless, FHFA believes that certain fees may benefit properties. Fees enhancing the value of collateral backing loans would not be inconsistent with safety and soundness goals.

FHFA proposes to exclude homeowners' and other similar organizations from the proposed rule in certain instances. First, FHFA acknowledges comments received on the proposed guidance from homeowner associations and their members, as well as from residents of New York co-operatives who feared that the “flip taxes” on their stock interests—analogous to transfer fees on typical real-estate transactions—would be adversely affected. These comments, mostly favorable though not unanimously so, and the longstanding existence and ubiquity of the transfer fees described, suggest that these fees are expected by and are familiar to many homeowner association members and are well understood in banking and mortgage markets.

Private transfer fees assessed by homeowners' and other covered organizations may be viewed as a means by which members of the organizations avoid paying the costs of their amenities out of current income, instead paying those costs out of the equity in their houses when they sell. While owners will then have less sales proceeds with which to buy their next house or to use for other purposes, this has been an accepted means of paying for the maintenance, infrastructure and amenities at these associations.

Further, transfer fees paid to associations contribute to the value of the burdened property through the amenities and maintenance that they fund, and hence do not pose the same valuation risk as do fees that fund other activities that do not provide a direct benefit to the burdened property.

Also FHFA is excepting from the proposed rule private transfer fees that are paid to nonprofit organizations that are tax-exempt under section 501(c)(3) or (c)(4) of the Code and provide direct benefits to the encumbered property. Private transfer fees paid to such nonprofits are comparable to those paid to a homeowners' association and should be similarly excepted from the proposed rule.

Accordingly, FHFA is excepting from the restrictions of the proposed rule private transfer fees paid to homeowners', condominium, cooperative and similar associations, and to certain tax-exempt organizations under section 501(c)(3) or (c)(4).

Some commenters described payments to non-profit organizations whose relation to the burdened properties was difficult to characterize, e.g., to grow and maintain the affordable housing stock, to support city and State redevelopment efforts or for environmental preservation.

These private transfer fees do not appear to provide exclusive support of cultural, educational, recreational, maintenance or environmental activities providing a “direct benefit” for the encumbered real property. Although the activities themselves may be meritorious, it appears that these private transfer fees provide a benefit to the general community rather than specifically to the community that is burdened by the private transfer fee covenants, and hence are not dedicated to enhancing the value of the residential housing collateral that is central to the underwriting of mortgage loans purchased and accepted by the regulated entities. Because these fees pose the valuation and other issues related to private transfer fees, without providing benefits that are directly focused on the burdened properties, FHFA declines to except them from the restrictions of the proposed rule.

Traditional real-estate law requires that, to be binding, a covenant running with the land must benefit the land that it burdens. Whether these more general charitable uses meet that test is an open question, which casts doubt on the validity of the covenants and hence creates a possible source of challenge in sales transactions. This is only one reason FHFA regards such private transfer fees, as well as those paid to developers and to unrelated parties, discussed below, as creating a safety and soundness risk for FHFA-regulated entities. 11

Private transfer fees paid to developers or other third parties also would be subject to the restrictions described in this proposed rule. Though asserted to be collected for the purpose of funding infrastructure investments, there is no assurance that they actually are. They are simply another source of return to the developer: a way for a developer to extract additional value from its real estate portfolio. There is no relationship between the transfer fee and the actual costs of the developer.

Proponents of private transfer fees payable to developers and their related parties commented that the fees would enable developers to proceed with developments that would otherwise be uneconomical. No evidence has been presented that this would be the case. The argument appears to depend on the proposition that the future income stream from the fee covenants could be securitized and the securities sold to realize immediate revenue for the developer. To FHFA's knowledge, no such securities have ever been issued, so FHFA regards the argument as speculative.

Further, the argument appears to be based on the assumption that the sales prices of the encumbered properties, when sold by the developer, would be discounted by less than the value of the transfer-fee-backed securities that would be sold. No evidence has been presented that this would be the case. There has been no demonstration of how purchasers should calculate the discount from the purchase price that would be necessary to offset the effect of the covenant, or that if the purchasers did make such a calculation accurately that there would be any remaining benefit to the developer from this scheme.

FHFA invites comment on these issues.

FHFA found persuasive the Banks' comments regarding the challenges in identifying mortgages on properties with private transfer fee covenants and securities backed by such mortgage loans. The issues of inconsistent disclosure, and access to loan files for individual loans covered by a blanket lien or for loans underlying securities, have merit.

Acceptable compliance with the final rule may be achieved through the Banks' quality control review process or through the Banks' collateral review process, coupled with appropriate direction to their members, as well as robust representations, warranties, or certifications. The Enterprises would be expected to use similar compliance tools such as appropriate provisions in seller-servicer guides, representations and warranties, and quality-control processes.

FHFA does not expect that the Banks must use such compliance tools with respect to Enterprise securities. Enterprise securities issued prospectively—should comply with the provisions of the final rule.

To avoid market uncertainties such as those suggested in the comment letters, the final rule will apply only to transfer fees created after the date of publication of the proposed rule, and to securities issued after that date backed by revenue from private transfer fees regardless of when the covenants were created. Regulated entities are required to comply with the final rule within 120 days after its publication.

While FHFA expressed concern in the proposed guidance regarding the level of private transfer fees, no specific request to consider or evaluate the proportion of the private transfer fee relative to its purpose was included in the proposed guidance. This proposed rule remains consistent with the proposed guidance on that point. FHFA is not requesting that the regulated entities consider or evaluate the level of private transfer fees. Comments received on this issue during the public comment period reinforced FHFA's concern about the relation between the fees and the value provided to the homeowners. This, in turn, reinforced FHFA's decision to issue the proposed rule to cover all private transfer fees other than those paid to homeowners' and similar associations, and to tax-exempt nonprofits under sections 501(c)(3) or (c)(4) of the Code, that provide a direct benefit to the encumbered property. Comments on the appropriate level of fees are welcome, but FHFA has not addressed that subject at this time.

As noted above, a number of States have enacted legislation restricting or otherwise regulating private transfer fees. FHFA has included a section in the proposed rule to clarify that the rule does not affect such legislation.

The proposed rule does not contain any collections of information pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Therefore, FHFA has not submitted any information to the Office of Management and Budget for review.

The proposed rule applies only to the regulated entities, which do not come within the meaning of small entities as defined in the Regulatory Flexibility Act ( See 5 U.S.C. 601(6)). Therefore, in accordance with section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 605(b)), FHFA certifies that this proposed rule, if promulgated as a final rule, will not have a significant economic impact on a substantial number of small entities.

For the reasons stated in the preamble, and under the authority of 12 U.S.C. 4526, the Federal Housing Finance Agency proposes to amend Chapter XII of Title 12 of the Code of Federal Regulations by adding a new part 1228 to subchapter B to read as follows:

On July 21, 2010, President Obama signed the Dodd-Frank Act. 1 Title VII of the Dodd-Frank Act  2 amended the Commodity Exchange Act (CEA)  3 to establish a comprehensive regulatory framework to reduce risk, increase transparency, and promote market integrity within the financial system by, among other things: (1) Providing for the registration and comprehensive regulation of swap dealers and major swap participants; (2) imposing clearing and trade execution requirements on standardized derivative products; (3) creating rigorous recordkeeping and real-time reporting regimes; and (4) enhancing the Commission's rulemaking and enforcement authorities with respect to all registered entities and intermediaries subject to the Commission's oversight.

Section 731 of the Dodd-Frank Act amends the CEA by adding a new section 4s, which sets forth a number of requirements for swap dealers and major swap participants. Specifically, section 4s(i) of the CEA establishes swap documentation standards for those registrants.

Section 4s(i)(1) requires swap dealers and major swap participants to “conform with such standards as may be prescribed by the Commission by rule or regulation that relate to timely and accurate confirmation, processing, netting, documentation, and valuation of all swaps.” Under section 4s(i)(2), the Commission is required to adopt rules “governing documentation standards for swap dealers and major swap participants.”

On January 13, 2011, the Commission voted to issue a notice of proposed rulemaking entitled, “Swap Trading Relationship Documentation Requirements for Swap Dealers and Major Swap Participants.” This proposed regulation supplements that proposal and sets forth another element of the swap trading relationship documentation that swap dealers, major swap participants, and their counterparties must include in their documentation. The Commission is proposing the regulation discussed below, pursuant to the authority granted under sections 4s(h)(1)(D), 4s(h)(3)(D), 4s(a), 4s(i), and 8a(5) of the CEA. 4 The Dodd-Frank Act requires the Commission to promulgate these provisions by July 15, 2011. 5

The proposed regulations reflect consultation with staff of the following agencies: (i) The Securities and Exchange Commission; (ii) the Board of Governors of the Federal Reserve System (Board of Governors); (iii) the Office of the Comptroller of the Currency; and (iv) the Federal Deposit Insurance Corporation (FDIC). Staff from each of these agencies has had the opportunity to provide comments to the proposal, and the proposed regulations incorporate elements of the comments provided.

In designing these rules, the Commission has taken care to minimize the burden on those parties that will not be registered with the Commission as swap dealers or major swap participants. To the extent that market participants believe that additional measures should be taken to reduce the burden or increase the benefits of documenting swap transactions, the Commission welcomes all comments.

This proposed rulemaking supplements a prior notice of proposed rulemaking under which two rules were proposed—§§ 23.504 and 23.505. This proposal would set forth another element of the swap trading relationship documentation that swap dealers, major swap participants, and their counterparties must include in their documentation under § 23.504(b). The provision would require that swap dealers and major swap participants include in the documentation with each of their counterparties a provision that confirms both parties' understanding of how the new orderly liquidation authority under the Title II of the Dodd-Frank Act and the Federal Deposit Insurance Act (FDIA) may affect their portfolios of uncleared, over-the-counter, bilateral swaps. 6

The Commission believes that the inclusion of this type of provision in the swap trading relationship documentation used by swap dealers and major swap participants registered with the Commission would promote legal certainty for market participants and lower litigation risk during times of significant market stress. In particular, the proposal would ensure both counterparties to a swap understand that under particular, unique circumstances, described in detail below, if one of the counterparties defaults, the non-defaulting party's positions could be transferred to a new, solvent counterparty by the FDIC, and the non-defaulting party may not be able to terminate its claims against the defaulting counterparty until 5 p.m. (U.S. eastern time) on the business day following the day the FDIC is appointed receiver. This stay would facilitate the FDIC's orderly liquidation of the defaulting counterparty's swap positions. This stay also is critical because it would allow the FDIC the requisite time to transfer the defaulter's open swap positions, claims, and collateral with the objective of avoiding widespread market disruption in the form of fire sales and contagion risk.

The recent financial crisis, particularly the tumultuous events of 2008, revealed that U.S. financial regulatory authorities lacked an orderly resolution mechanism for certain large financial companies. The lack of such a resolution mechanism led to the need for government bail outs of financial companies considered “too big to fail” and contributed to major financial market dislocations resulting from the disorderly insolvency of Lehman Brothers Inc. and its affiliates under the Federal bankruptcy code.

One of the key lessons of the financial crisis is that for systemically important institutions, the traditional bankruptcy process may be too slow and cumbersome to effectively deal with defaults that require near instant action to diminish their effect on other entities and the financial system as a whole. 7 This is especially true for financial companies with significant derivatives positions that require frequent adjustments based on trading strategies and the need to manage exposure to market risk.

With the passage of the Dodd-Frank Act, Congress sought to address these problems though the enactment of Title II, which establishes an “orderly liquidation authority” under which systemically important financial companies can be resolved in an orderly manner. This authority is separate from, but consistent with, the Federal bankruptcy and State dissolution laws.

Under Title II of the Dodd-Frank Act, Congress provided “the necessary authority to liquidate failing financial companies  8 that pose a significant risk to the financial stability of the United States in a manner that mitigates such risk and minimizes moral hazard.”  9 To this end, Title II establishes a process under which, upon the recommendation of the FDIC and the Board of Governors, and after consultation with the President, the Secretary of the Treasury appoints the FDIC as the receiver to wind down the affairs of, and liquidate the assets of, the financial company whose default may pose a systemic risk to the financial markets. Accordingly, the decision to act under Title II would be taken under conditions that would have “serious adverse effects on financial stability in the United States.”  10

Title II provides certain Federal financial regulatory authorities with the power, but not the obligation, to conduct an orderly wind down of a financial company. If the authorities decide not to act, the regular insolvency processes under the Federal bankruptcy code or banking laws would apply. For instance, non-bank swap dealers and major swap participants would be subject to the bankruptcy code's chapter 7 or chapter 11 proceedings. 11

Title II applies to a class of business entities, referred as “covered financial companies,” that meet certain criteria as determined by the Secretary of the Treasury under a process described in the next section. This class potentially could include swap dealers and major swap participants registered with the Commission. For example, under Title II, any company that is registered as a swap dealer or major swap participant with the Commission and designated as a systemically important financial institution (SIFI) by the Financial Stability Oversight Council (FSOC) under a process laid out in Title I of the Dodd-Frank Act, 12 could be deemed to be a “covered financial company” under Title II. 13

It also is possible that a swap dealer or a major swap participant might be deemed to be a “covered financial company” independent of Title I's FSOC designation process. Under Title II, such a company could be deemed to be a “financial company” if that entity is (1) predominantly engaged in financial activities  14 and (2) those financial activities generate 85% or more of the company's revenues. 15 A “covered financial company” is a financial company for which a determination has been made under section 203(b) of the Dodd-Frank Act by the Secretary of the Treasury. A prerequisite to that determination process is the written recommendation of both the FDIC and the Board of Governors.

In making a determination to act under Title II, the Secretary of the Treasury (in consultation with the President) must determine that, among other things: (1) The financial company is in default or in danger of default;  16 (2) the default of the financial company would have a serious adverse effect on the financial stability of the United States; and (3) no viable private sector alternative is available to prevent the default. The Secretary must make a specific determination that any effect on the claims or interests of creditors, counterparties, and shareholders is appropriate. 17

In order to meet each of these criteria, it is likely that a financial company would have to have a significant level of market and credit exposure and its default would be likely to pose a grave risk to financial markets. Only after these determinations have been made would the FDIC be granted resolution authority under Title II.

Before describing the FDIC's resolution authority under Title II, it is important to note that the FDIC also may have resolution authority over a swap dealer or major swap participant that is an insured depository institution. Generally speaking, an insured depository institution is defined under section 3(c) of the Federal Deposit Insurance Act (FDIA) as any bank or savings association the deposits of which are insured by the FDIC. 18 Under the FDIA, the FDIC has the authority to liquidate or wind up the affairs of an insured depository institution. Some swap dealers and major swap participants registered with the Commission may be insured depository institutions.

In many ways, the Title II resolution approach is modeled upon the FDIA. Indeed, as discussed below, certain Title II provisions are identical to provisions in FDIA. Consequently, the FDIC would be able to exercise similar powers with regard to swap dealers and major swap participants regardless of whether the FDIC was acting under Title II or FDIA. Under either statutory authority, it is likely that the orderly wind-down and liquidation of those large firms whose demise may have systemic implications would have similar characteristics. For example, under both Title II and the FDIA, the FDIC would have the authority to transfer open positions, claims, and collateral to a receiving entity in an effort to move quickly to stabilize what could be deteriorating market conditions. 19

As part of the resolution authority in Title II and in the existing provisions of the FDIA for insured depository institutions, the FDIC is given a one business day period in which to transfer swaps and certain other contracts to a solvent third party financial institution. For this transfer authority to be effective, a brief stay on the ability of counterparties to terminate, liquidate, or net is necessary.

Specifically, under section 210(c)(10) of Dodd-Frank or 11(e)(10) of FDIA, parties to qualified financial contracts  20 are prohibited from terminating, liquidating, or netting out positions solely by reason of the appointment of the FDIC as receiver or the financial condition of the insured depository institution, covered financial company, or covered subsidiary in receivership until the close of the next business day following the date of appointment of the FDIC as receiver. A party is also precluded from exercising any such contractual rights after it has received notice that its qualified financial contract has been transferred to another financial institution—including a bridge financial company. The effect of these provisions is to provide the FDIC one day after its appointment as receiver to consummate a transfer of a qualified financial contract to either a private acquirer or to a newly created bridge bank or financial company. Absent one of these two types of transfers within the allotted time frame, parties may exercise their contractual rights.

Swaps subject to the Commission's jurisdiction under Title VII of the Dodd-Frank Act would appear to be subject to orderly liquidation under either Title II or the FDIA by virtue of the fact that they fall under the definition of “qualified financial contract” under those two statutes. 21 The definition of qualified financial contract is identical under both Title II and FDIA and includes securities contracts, commodity contracts, 22 forward contracts, repurchase agreements, swap agreements, and any other contract determined by the FDIC to be a qualified financial contract.

The Commission recognizes the potential for regulatory arbitrage if the definition of qualified financial contract does not apply to swaps under Title VII. Moreover, the Commission believes that should the need for an orderly liquidation of any systemically important swap dealer or major swap participant arise, it would be most appropriate and practicable for all swaps held on the books of those entities to be considered to be part of a comprehensive and orderly resolution process.

While the Commission is not granted explicit authority under Title II, that section does recognize the need for all U.S. financial authorities to work together and to “take all steps necessary and appropriate to assure that all parties * * * having responsibility for the condition of the financial company bear losses consistent with their respons ibility * * *.”  23 In addition, if the FDIC is appointed receiver of a swap dealer or major swap participant for which the Commission is the primary regulator, the FDIC is required to consult with the Commission “for purposes of ensuring an orderly liquidation of the entity.”  24 As part of its consultative role, the Commission might have information on defaulting swap dealers or major swap participants that is relevant to the resolution process. Moreover, the Commission may have responsibility for potential transferees, i.e., firms to which open swap positions might be transferred.

Previously proposed § 23.504(a) would require that swap dealers and major swap participants establish, maintain, and enforce written policies and procedures reasonably designed to ensure that each swap dealer or major swap participant and its counterparties have agreed in writing to all of the terms governing their swap trading relationship. Under previously proposed § 23.504(b), swap trading relationship documentation would include written agreement by the parties on certain terms, including general provisions on payment obligations, netting of payments, events of default or other termination events, transfer of rights and obligations, and governing law.

Proposed § 23.504(b)(5) would supplement the prior proposal by requiring the inclusion of a written agreement by the parties to comply with the FDIC's transfer authority under section 210(c)(9) and (10) of the Dodd-Frank Act and with the nearly identical sections under the FDIA. 25 This provision under the swap trading relationship documentation could be invoked only if a party to the documentation is deemed to be a “covered financial company” under Title II or is an insured depository institution and the FDIC is appointed as a receiver. Under either scenario, the proposed rule refers to this party as the “covered party.”

The language of proposed § 23.504(b)(5)(i) very closely tracks the statutory language of section 210(c)(10)(B) of the Dodd-Frank Act and section 11(e)(10)(B) of the FDIA. Under this provision, counterparties will acknowledge in their trading relationship documentation that neither will exercise any right to terminate a swap due to the appointment of the FDIC as a receiver under Title II or the FDIA  26 until the close of the next business day after such appointment, or it receives notice that the FDIC has transferred its swaps to a performing third party (including a bridge bank, bridge financial institution, or other government-run financial institution). This stay provision would expire at 5 p.m. on the business day after the FDIC is appointed as receiver or as soon as the non-defaulting party receives notice that the FDIC has transferred the defaulting party's swaps positions, claims, and property supporting the positions pursuant to section 210(c)(9)(A) of the Dodd-Frank Act or section 11(e)(9)(A) of the FDIA.

I. Background

On July 21, 2010, President Obama signed the Dodd-Frank Act. 1 Title VII of the Dodd-Frank Act  2 amended the Commodity Exchange Act (CEA)  3 to establish a comprehensive regulatory framework to reduce risk, increase transparency, and promote market integrity within the financial system by, among other things: (1) Providing for the registration and comprehensive regulation of swap dealers and major swap participants; (2) imposing clearing and trade execution requirements on standardized derivative products; (3) creating rigorous recordkeeping and real-time reporting regimes; and (4) enhancing the Commission's rulemaking and enforcement authorities with respect to all registered entities and intermediaries subject to the Commission's oversight.

Section 731 of the Dodd-Frank Act amends the CEA by adding a new section 4s, which sets forth a number of requirements for swap dealers and major swap participants. Specifically, section 4s(i) of the CEA establishes swap documentation standards for those registrants.

Section 4s(i)(1) requires swap dealers and major swap participants to “conform with such standards as may be prescribed by the Commission by rule or regulation that relate to timely and accurate confirmation, processing, netting, documentation, and valuation of all swaps.” Under section 4s(i)(2), the Commission is required to adopt rules “governing documentation standards for swap dealers and major swap participants.” The Commission is proposing the regulations governing swap documentation discussed below, pursuant to the authority granted under sections 4s(h)(1)(D), 4s(h)(3)(D), 4s(i), and 8a(5) of the CEA. 4 The Dodd-Frank Act requires the Commission to promulgate these provisions by July 15, 2011. 5

The proposed regulations reflect consultation with staff of the following agencies: (i) The Securities and Exchange Commission; (ii) the Board of Governors of the Federal Reserve System; (iii) the Office of the Comptroller of the Currency; and (iv) the Federal Deposit Insurance Corporation. Staff from each of these agencies has had the opportunity to provide oral and/or written comments to the proposal, and the proposed regulations incorporate elements of the comments provided.

In designing these rules, the Commission has taken care to minimize the burden on those parties that will not be registered with the Commission as swap dealers or major swap participants. To the extent that market participants believe that additional measures should be taken to reduce the burden or increase the benefits of documenting swap transactions, the Commission welcomes all comments.

The proposed regulations would set forth certain requirements for documenting the swap trading relationship between swap dealers, major swap participants, and their counterparties. Documentation of swaps is a critical component of the bilaterally-traded, over-the-counter (OTC) derivatives market and has been the focus of significant domestic and international attention in recent years.

The OTC derivatives markets traditionally have been characterized by privately negotiated transactions entered into by two counterparties, in which each party assumes and manages the credit risk of the other. While OTC derivatives are traded by a diverse set of market participants, such as banks, hedge funds, pension funds, and other institutional investors, as well as corporate, governmental, and other end-users, a relatively few number of dealers are, by far, the most significantly active participants. As such, the default of a dealer may result in significant losses for the counterparties of that dealer, either from the counterparty exposure to the defaulting dealer or from the cost of replacing the defaulted trades in times of market stress. 6

OTC derivatives market participants typically have relied on the use of industry standard legal documentation, including master netting agreements, definitions, schedules, and confirmations, to document their swap trading relationships. This industry standard documentation, such as the widely used ISDA Master Agreement and related definitions, schedules, and confirmations specific to particular asset classes, offers a framework for documenting the transactions between counterparties for OTC derivatives products. 7 The standard documentation is designed to set forth the legal, trading, and credit relationship between the parties and to facilitate cross-product netting of transactions in the event that parties have to close-out their position with one another.

One important method of addressing the credit risk that arises from OTC derivatives transactions is the use of bilateral close-out netting. Parties seek to achieve enforceable bilateral netting by documenting all of their transactions under master netting agreements. 8 Following the occurrence of a default by one of the counterparties (such as bankruptcy or insolvency), the exposures from individual transactions between the two parties are netted and consolidated into a single net “lump sum” obligation. A party's overall exposure is therefore limited to this net sum. That exposure then may be offset by the available collateral previously provided being applied against the net exposure. As such, it is critical that the netting provisions between the parties are legally enforceable and that the collateral may be used to meet the net exposure. In recognition of the risk-reducing benefits of close-out netting, many jurisdictions provide favorable treatment of netting arrangements in bankruptcy, 9 and favorable capital and accounting treatment to parties that have enforceable netting agreements in place. 10

There is also a risk that inadequate documentation of open swap transactions could result in collateral and legal disputes, thereby exposing counterparties to significant counterparty credit risk. By way of contrast, adequate documentation between counterparties offers a framework for establishing the trading relationship between the parties. The use of common legal documentation also encourages standardization of traded products. This, in turn, may facilitate central clearing and trading as sufficient standardization is a prerequisite for central clearing and trading on an exchange or electronic platform.

In response to the global economic crisis, in September 2009, G-20 Leaders agreed in Pittsburgh to critical elements relating to OTC derivatives reform, including a provision that “[a]ll standardized OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties. * * *”  11 In June 2010 in Toronto, the G-20 Leaders reaffirmed this commitment, and expressly stated their objective of increasing standardization in the OTC derivatives markets. 12 With the passage of the Dodd-Frank Act in July 2010, Congress expressly recognized the link between standardized swaps and clearing, as well. 13

In addition, increasing standardization of swap documentation should improve the market in a number of other ways, including: Facilitating automated processing of transactions; increasing the fungibility of the contracts, which enables greater market liquidity; improving valuation and risk management; increasing the reliability of price information; reducing the number of problems in matching trades; and facilitating reporting to swap data repositories. 14

Product and process standardization are also key conditions for increased automation and central clearing of OTC derivatives. As a result of targeted supervisory encouragement since 2005, 15 credit derivative market participants have standardized CDS product design and post-trade processes in tandem, leading to greater operational efficiencies, encouraging higher volumes of standardized transactions, and most significantly, providing the requisite operational environment for the implementation of centralized risk-reducing infrastructure, including central counterparty clearing.

Many standardized processes have been established for CDS legal documentation and trading conventions, and in turn, the standardization of product design has enabled market participants to implement infrastructure that automates and centralizes trading, recordkeeping, trade compression, and clearing. For example, the standardization of coupons in the single-name CDS product was largely motivated by the desire to create an efficient process for offsetting contracts. The market-wide adoption of fixed coupons allowed single-name CDS instruments to be centrally cleared, in effect standardizing counterparty credit risk management in these products. The “Big Bang Protocol” further standardized a number of critical operational processes. 16 The protocol: (i) “Hardwired” a standard auction mechanism into CDS trading documentation, eliminating the need for ad hoc protocols; (ii) incorporated the resolutions of the ISDA Determinations Committees into the terms of standard CDS documentation; and (iii) instituted a common standard effective date for CDS transactions. Codifying key standardized processes into CDS products has brought greater certainty to managing the risk of CDS transactions and has provided the structural foundation for greater automation, higher volumes in standardized transactions, and ultimately the establishment of centralized risk-reducing infrastructure, such as central counterparties.

To promote the “timely and accurate * * * documentation * * * of all swaps” under § 4s(i)(1) of the CEA, proposed § 23.504(a) would require that swap dealers and major swap participants establish, maintain, and enforce written policies and procedures reasonably designed to ensure that each swap dealer or major swap participant and its counterparties have agreed in writing to all of the terms governing their swap trading relationship and have executed all agreements required by proposed § 23.504.

Proposed § 23.504(b)(1) would specify that the swap trading relationship documentation include written agreement by the parties on terms relating to payment obligations, netting of payments, events of default or other termination events, netting of obligations upon termination, transfer of rights and obligations, governing law, valuation, and dispute resolution procedures. Proposed § 23.504(b)(2) would establish that all confirmations of swap transactions, as required under previously proposed § 23.501, would be considered to be part of the required swap trading relationship documentation.

Swap trading relationship documentation under proposed § 23.504(b)(3)(i) and (ii) also would include credit support arrangements containing initial and variation margin requirements at least as high as those set by the Commission (for swap dealers and major swap participants that are not banks) and by prudential regulators (for entities that are banks). These credit support arrangements also would be required to identify the forms of eligible assets that may be used as margin and asset valuation haircuts.

Under proposed § 23.504(b)(3)(iii) and (iv), the credit support arrangements between swap dealers and major swap participants would include documentation of the treatment of any assets used as margin for uncleared swaps. These provisions are intended to work together with the rules previously proposed under section 4s(l) of the CEA, 17 and thus require documentation as to whether the funds and other property are to be segregated with an independent third party, in accordance with § 23.601(e). The provisions also are designed to work together with rules to be proposed under section 4s(e) of the CEA that relate to margin requirements.

Under § 23.601, as previously proposed, swap dealers and major swap participants trading uncleared swaps would be required to notify each counterparty that the counterparty has the right to require segregation of the funds or other property that it supplies as “initial margin,” a term defined in previously proposed § 23.600. 18 At the request of the counterparty, the swap dealer or major swap participant would be required to segregate such initial margin with an independent third party. Under section 4s(l) of the CEA, this segregation requirement would not apply to variation margin payments. Proposed § 23.602(a)(2), however, would permit the swap dealer or major swap participant and the counterparty to agree that variation margin also may be held in a segregated account. Under proposed § 23.601(e), swap dealers and major swap participants would notify each counterparty of the opportunity to revisit their segregation decision once per calendar year.

Swap dealers and major swap participants also must comply with proposed § 23.603(a), which would provide that segregated initial margin may only be invested consistent with the standards for investment of customer funds that the Commission applies to exchange-traded futures ( see § 1.25 of Commission regulations), and with proposed § 23.603(b), which would provide that swap dealers and major swap participants and their counterparties may enter into any commercial arrangement, in writing, regarding the investment of segregated initial margin and the related allocation of the gains and losses resulting from such investments. The Commission anticipates that documentation of the foregoing matters would be included in the trading relationship documentation required pursuant to proposed § 23.504(b)(3)(iii).

Swap dealers and major swap participants could maintain standard templates for documenting their trading relationships as a way of complying with the requirements of § 23.504. The Commission would also consider it a sound practice for swap dealers and major swap participants to require senior management in the business trading and risk management units to approve all templates, and any material modifications to them. The Commission recognizes the work that the industry has undertaken over the past several years to update and standardize the documentation it relies upon for various asset classes, and the Commission encourages market participants to adopt standardized confirmation templates, standardized master confirmation agreements, 19 standardized product definitions, and other standardized documentation developed by the industry. Standardized documentation and definitions promote standardized products, which may lead to greater liquidity and more efficient pricing. In addition, increased product standardization may bring systemic risk-reduction benefits as the risks associated with standardized products are better understood by the entire marketplace.

Swap valuation disputes have long been recognized as a significant problem in the OTC derivatives market. 20 The ability to determine definitively the value of a swap at any given time lies at the center of many of the OTC derivatives market reforms contained in the Dodd-Frank Act and is a cornerstone of risk management. Swap valuation is also crucial for determining capital and margin requirements applicable to swap dealers and major swap participants and therefore plays a primary role in risk mitigation for uncleared swaps.

The Commission recognizes that swap valuation is not always an easy task. In some instances, there is widespread agreement on valuation methodologies and the source of formula inputs for frequently traded swaps. These swaps are the proverbial “low-hanging fruit,” and many have been accepted for clearing ( i.e. , commonly traded interest rate swaps and credit default swaps). However, parties often dispute valuations of thinly traded swaps where there is not widespread agreement on valuation methodologies or the source for formula inputs. Many of these swaps are thinly traded either because of their limited use as risk management tools or because they are simply too customized to have comparable counterparts in the market. As many of these swaps are valued by dealers internally by “marking-to-model,” their counterparties may dispute the inputs and methodologies used in the model. As uncleared swaps are bilateral, privately negotiated contracts, on-going swap valuation for purposes of initial and variation margin calculation and swap terminations or novations, has also been largely a process of on-going negotiation between the parties. The inability to agree on the value of a swap became especially acute during the 2007-2009 financial crisis when there was widespread failure of the market inputs needed to value many swaps. 21

This document supplements the Commission's proposed rule published in the Federal Register of January 4, 2011 (76 FR 295) by providing the dates, times and locations of the public hearings to be held on proposed amendments to the Commission's Water Quality Regulations, Water Code and Comprehensive Plan relating to the conservation and development of water resources of the Delaware River Basin during the implementation of natural gas development projects. The tentative hearing dates published in the notice of January 4, 2011 have been changed. The exact locations and times of the public hearings were not included in the January 4 notice and are provided here.

The text of the proposed amendments and additional details about how to submit written and oral testimony are available on the Commission's Web site, drbc.net.

Public Participation and Request for Comments

We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided.

If you submit a comment, please include the docket number for this rulemaking (USCG-2010-1091), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online (via http://www.regulations.gov ) or by fax, mail, or hand delivery, but please use only one of these means. If you submit a comment online via http://www.regulations.gov, it will be considered received by the Coast Guard when you successfully transmit the comment. If you fax, hand deliver, or mail your comment, it will be considered as having been received by the Coast Guard when it is received at the Docket Management Facility. We recommend that you include your name and a mailing address, an e-mail address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.

To submit your comment online, go to http://www.regulations.gov , click on the “submit a comment” box, which will then become highlighted in blue. In the “Document Type” drop down menu select “Proposed Rule” and insert “USCG-2010-1091” in the “Keyword” box. Click “Search” then click on the balloon shape in the “Actions” column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period and may change the rule based on your comments.

To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov , click on the “read comments” box, which will then become highlighted in blue. In the “Keyword” box insert “USCG-2010-1091” and click “Search.” Click the “Open Docket Folder” in the “Actions” column. You may also visit the Docket Management Facility in Room W12-140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility.

Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc. ). You may review a Privacy Act notice regarding our public dockets in the January 17, 2008, issue of the Federal Register (73 FR 3316).

We do not now plan to hold a public meeting. But you may submit a request for one on or before February 23, 2011 using one of the four methods specified under ADDRESSES . Please explain why you believe a public meeting would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

In response to media reports of military munitions found in Gravesend Bay by civilian divers, U.S. Navy Explosive Ordnance Disposal divers from Naval Weapons Station Earle conducted underwater surveys and confirmed the location of munitions on the bottom of Gravesend Bay. The munitions consist of approximately 1500 rounds of 20mm ammunition, one 3-inch diameter projectile and two cartridge casings. The Captain of the Port (COTP) New York has established a temporary safety zone under docket number USCG-2010-1126 as an interim measure while this long-term rulemaking process is pursued.

In the interest of public safety, the U.S. Navy has requested that the Coast Guard limit access to the location in Gravesend Bay where the munitions are located until the ordnance can be rendered safe and removed.

This safety zone is necessary to ensure the safety of mariners, vessels, and civilian divers from the potential hazards associated with unexploded military munitions.

The COTP New York proposes to establish a safety zone around the location of an unexploded munitions site to ensure the safety of mariners and vessels transiting near the location of the ordnance as well as divers intending to dive in the area.

The proposed safety zone will encompass all waters of Gravesend Bay within 110-yard radius of position 40°36′30″ N, 074°02′14″ W (NAD 83), approximately 70-yards southeast of the Verrazano Bridge Brooklyn tower.

Entry into the proposed safety zone by any person or vessel will be prohibited unless specifically authorized by the COTP New York, or the designated on-scene representative. Persons desiring to enter the safety zone may request permission to enter from the Coast Guard COTP via VHF Channel 16 or by contacting the Sector New York Command Center at (718) 354-4353.

The Coast Guard advises that entry into, transiting, diving, dredging, dumping, fishing, trawling, conducting salvage operations, remaining within or anchoring in this safety zone will be prohibited unless authorized by the COTP New York or the designated on-scene representative.

The “designated on-scene representative” is any Coast Guard commissioned, warrant, or petty officer who has been designated by the COTP New York to act on her behalf.

We developed this proposed rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

This proposed rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

Although this proposed rule restricts access to a small portion of Gravesend Bay until military munitions are rendered safe and removed, the effect of this regulation would not be significant due to the following reasons: the safety zone would cover only a small portion of the navigable waters within Gravesend Bay. Vessels would be able to safely transit around the area. In addition, vessels may be authorized to enter the zone with permission of the COTP New York.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit, fish, dive, or anchor in a portion of Gravesend Bay.

This proposed safety zone would not have a significant economic impact on a substantial number of small entities for the following reasons. This safety zone would limit access to a relatively small portion of the waterway. Vessel traffic could safely transit around the safety zone. Before the activation of the zone, we would issue maritime advisories widely available to users of the waterway in the vicinity of Gravesend Bay.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment ( see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or e-mail LTJG Eunice James, Coast Guard Sector New York Waterways Management Division; telephone 718-354-4163, e-mail Eunice.A.James@uscg.mil. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This proposed rule would not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this proposed rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.

This proposed rule does not have Tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

We have analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. A preliminary environmental analysis checklist supporting this determination is available in the docket where indicated under ADDRESSES . This proposed rule involves the establishment of a safety zone which can be categorically excluded, under figure 2-1, paragraph (34)(g), of the Commandant Instruction. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 165 as follows:

Under Title VIII of the Alaska National Interest Lands Conservation Act (ANILCA) (16 U.S.C. 3111-3126), the Secretary of the Interior and the Secretary of Agriculture (Secretaries) jointly implement the Federal Subsistence Management Program. This program provides a preference for take of fish and wildlife resources for subsistence uses on Federal public lands and waters in Alaska. The Secretaries published temporary regulations to carry out this program in the Federal Register on June 29, 1990 (55 FR 27114), and final regulations were published in the Federal Register on May 29, 1992 (57 FR 22940). The Program has subsequently amended these regulations a number of times. Because this program is a joint effort between Interior and Agriculture, these regulations are located in two titles of the Code of Federal Regulations (CFR): Title 36, “Parks, Forests, and Public Property,” and Title 50, “Wildlife and Fisheries,” at 36 CFR 242.1-28 and 50 CFR 100.1-28, respectively. The regulations contain subparts as follows: Subpart A, General Provisions; Subpart B, Program Structure; Subpart C, Board Determinations; and Subpart D, Subsistence Taking of Fish and Wildlife.

Consistent with subpart B of these regulations, the Secretaries established a Federal Subsistence Board to administer the Federal Subsistence Management Program. The Board is currently made up of:

• A Chair appointed by the Secretary of the Interior with concurrence of the Secretary of Agriculture;

• The Alaska Regional Director, U.S. Fish and Wildlife Service;

• The Alaska Regional Director, U.S. National Park Service;

• The Alaska State Director, U.S. Bureau of Land Management;

• The Alaska Regional Director, U.S. Bureau of Indian Affairs; and

• The Alaska Regional Forester, U.S. Forest Service.

Through the Board, these agencies participate in the development of regulations for subparts C and D, which, among other things, set forth program eligibility and specific harvest seasons and limits.

In administering the program, the Secretaries divided Alaska into 10 subsistence resource regions, each of which is represented by a Regional Advisory Council. The Regional Advisory Councils provide a forum for rural residents with personal knowledge of local conditions and resource requirements to have a meaningful role in the subsistence management of fish and wildlife on Federal public lands in Alaska. The Regional Advisory Council members represent varied geographical, cultural, and user interests within each region.

The Regional Advisory Councils have a substantial role in reviewing this proposed rule and making recommendations for the final rule. The Federal Subsistence Board, through the Regional Advisory Councils, will hold meetings on this proposed rule at the following locations in Alaska, on the following dates:

During April 2011, the written proposals to change the subpart D, take of wildlife regulations and subpart C, customary and traditional use determinations, will be compiled and distributed for public review. During the 30-day public comment period, which is presently scheduled to end on May 15, 2011, written public comments will be accepted on the distributed proposals.

The Board, through the Regional Advisory Councils, will hold a second series of meetings in August through October 2011, to receive comments on specific proposals and to develop recommendations to the Board at the following locations in Alaska, on the following dates:

A notice will be published of specific dates, times, and meeting locations in local and statewide newspapers prior to both series of meetings. Locations and dates may change based on weather or local circumstances. The amount of work on each Regional Advisory Council's agenda determines the length of each Regional Advisory Council meeting.

The Board will discuss and evaluate proposed changes to the subsistence management regulations during a public meeting scheduled to be held in Anchorage, AK, in January 2012. The Regional Advisory Council Chairs, or their designated representatives, will present their respective Councils' recommendations at the Board meeting. Additional oral testimony may be provided on specific proposals before the Board at that time. At that public meeting, the Board will deliberate and take final action on proposals received that request changes to this proposed rule.

Proposals to the Board to modify the general fish and wildlife regulations, wildlife harvest regulations, and customary and traditional use determinations must include the following information:

a. Name, address, and telephone number of the requestor;

b. Each section and/or paragraph designation in this proposed rule for which changes are suggested, if applicable;

c. A description of the regulatory change(s) desired;

d. A statement explaining why each change is necessary;

e. Proposed wording changes; and

f. Any additional information that you believe will help the Board in evaluating the proposed change.

The Board immediately rejects proposals that fail to include the above information, or proposals that are beyond the scope of authorities in § ___.24, subpart C (the regulations governing customary and traditional use determinations), and §§ ___.25 and ___.26, subpart D (the general and specific regulations governing the subsistence take of wildlife). During the January 2012 meeting, the Board may defer review and action on some proposals to allow time for cooperative planning efforts, or to acquire additional needed information. The Board may elect to defer taking action on any given proposal if the workload of staff, Regional Advisory Councils, or the Board becomes excessive. These deferrals may be based on recommendations by the affected Regional Advisory Council(s) or staff members, or on the basis of the Board's intention to do least harm to the subsistence user and the resource involved. A proponent of a proposal may withdraw the proposal provided it has not been presented to a Regional Advisory Council for action. The Board may consider and act on alternatives that address the intent of a proposal while differing in approach.

As expressed in Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” the Federal officials that have been delegated authority by the Secretaries are committed to honoring the unique government-to-government political relationship that exists between the Federal Government and Federally Recognized Indian Tribes (Tribes) as listed in 75 FR 60810 (October 1, 2010). Consultation with Alaska Native corporations is based on Public Law 108-199, div. H, Sec. 161, Jan. 23, 2004, 118 Stat. 452, as amended by Public Law 108-447, div. H, title V, Sec. 518, Dec. 8, 2004, 118 Stat. 3267, which provides that: “The Director of the Office of Management and Budget and all Federal agencies shall hereafter consult with Alaska Native corporations on the same basis as Indian tribes under Executive Order No. 13175.”

The Alaska National Interest Lands Conservation Act does not provide rights to Tribes for the subsistence taking of wildlife, fish, and shellfish. However, because tribal members are affected by subsistence fishing, hunting, and trapping regulations, the Secretaries, through the Board, will provide Federally recognized Tribes and Alaska Native corporations an opportunity to consult on this rule.

The Board will engage in outreach efforts for this rule, including a notification letter, to ensure that Tribes and Alaska Native corporations are advised of the mechanisms by which they can participate. The Board provides a variety of opportunities for consultation: Proposing changes to the existing rule; commenting on proposed changes to the existing rule; engaging in dialogue at the Regional Council meetings; engaging in dialogue at the Board's meetings; and providing input in person, by mail, e-mail, or phone at any time during the rulemaking process. The Board will commit to efficiently and adequately providing an opportunity to Tribes and Alaska Native corporations for consultation in regard to subsistence rulemaking.

The Board will consider Tribes' and Alaska Native corporations' information, input, and recommendations, and address their concerns as much as practicable. The Board will inform the Tribes and Alaska Native corporations how their recommendations were considered.

Subpart C and D regulations are subject to periodic review and revision. The Federal Subsistence Board currently completes the process of revising subsistence take of wildlife regulations in even-numbered years and fish and shellfish regulations in odd-numbered years; public proposal and review processes take place during the preceding year. The Board also addresses customary and traditional use determinations during the applicable cycle.

The text of the final rule published June 30, 2010 (75 FR 37918) for the 2010-12 subparts C and D regulations is the text of this proposed rule. These regulations will remain in effect until subsequent Board action changes elements as a result of the public review process outlined above in this document.

A Draft Environmental Impact Statement that described four alternatives for developing a Federal Subsistence Management Program was distributed for public comment on October 7, 1991. The Final Environmental Impact Statement (FEIS) was published on February 28, 1992. The Record of Decision (ROD) on Subsistence Management for Federal Public Lands in Alaska was signed April 6, 1992. The selected alternative in the FEIS (Alternative IV) defined the administrative framework of an annual regulatory cycle for subsistence regulations.

A 1997 environmental assessment dealt with the expansion of Federal jurisdiction over fisheries and is available at the office listed under FOR FURTHER INFORMATION CONTACT . The Secretary of the Interior, with concurrence of the Secretary of Agriculture, determined that expansion of Federal jurisdiction does not constitute a major Federal action significantly affecting the human environment and, therefore, signed a Finding of No Significant Impact.

An ANILCA § 810 analysis was completed as part of the FEIS process on the Federal Subsistence Management Program. The intent of all Federal subsistence regulations is to accord subsistence uses of fish and wildlife on public lands a priority over the taking of fish and wildlife on such lands for other purposes, unless restriction is necessary to conserve healthy fish and wildlife populations. The final § 810 analysis determination appeared in the April 6, 1992, ROD and concluded that the Federal Subsistence Management Program, under Alternative IV with an annual process for setting subsistence regulations, may have some local impacts on subsistence uses, but will not likely restrict subsistence uses significantly.

During the subsequent environmental assessment process for extending fisheries jurisdiction, an evaluation of the effects of this rule was conducted in accordance with § 810. That evaluation also supported the Secretaries' determination that the rule will not reach the “may significantly restrict” threshold that would require notice and hearings under ANILCA § 810(a).

An agency may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. This proposed rule does not contain any new collections of information that require OMB approval. OMB has reviewed and approved the following collections of information associated with the subsistence regulations at 36 CFR part 242 and 50 CFR part 100: Subsistence hunting and fishing applications, permits, and reports, Federal Subsistence Regional Advisory Council Membership Application/Nomination and Interview Forms (OMB Control No. 1018-0075 expires January 31, 2013).

The Office of Management and Budget (OMB) has determined that this proposed rule is not significant and has not reviewed this rule under Executive Order 12866. OMB bases its determination upon the following four criteria:

(a) Whether the rule will have an annual effect of $100 million or more on the economy or adversely affect an economic sector, productivity, jobs, the environment, or other units of the government.

(b) Whether the rule will create inconsistencies with other agencies' actions.

(c) Whether the rule will materially affect entitlements, grants, user fees, loan programs, or the rights and obligations of their recipients.

(d) Whether the rule raises novel legal or policy issues.

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq. ) requires preparation of flexibility analyses for rules that will have a significant effect on a substantial number of small entities, which include small businesses, organizations, or governmental jurisdictions. In general, the resources to be harvested under this rule are already being harvested and consumed by the local harvester and do not result in an additional dollar benefit to the economy. However, we estimate that two million pounds of meat are harvested by subsistence users annually and, if given an estimated dollar value of $3.00 per pound, this amount would equate to about $6 million in food value statewide. Based upon the amounts and values cited above, the Departments certify that this rulemaking will not have a significant economic effect on a substantial number of small entities within the meaning of the Regulatory Flexibility Act.

Under the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801 et seq. ), this rule is not a major rule. It does not have an effect on the economy of $100 million or more, will not cause a major increase in costs or prices for consumers, and does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

Title VIII of ANILCA requires the Secretaries to administer a subsistence priority on public lands. The scope of this program is limited by definition to certain public lands. Likewise, these regulations have no potential takings of private property implications as defined by Executive Order 12630.

The Secretaries have determined and certify pursuant to the Unfunded Mandates Reform Act, 2 U.S.C. 1502 et seq., that this rulemaking will not impose a cost of $100 million or more in any given year on local or State governments or private entities. The implementation of this rule is by Federal agencies and there is no cost imposed on any State or local entities or tribal governments.

The Secretaries have determined that these regulations meet the applicable standards provided in §§ 3(a) and 3(b)(2) of Executive Order 12988, regarding civil justice reform.

In accordance with Executive Order 13132, the proposed rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. Title VIII of ANILCA precludes the State from exercising subsistence management authority over fish and wildlife resources on Federal lands unless it meets certain requirements.

The Alaska National Interest Lands Conservation Act does not provide rights to tribes for the subsistence taking of wildlife, fish, and shellfish. However, the Board will provide Federally recognized Tribes and Alaska Native corporations an opportunity to consult on this rule. Consultation with Alaska Native corporations are based on Public Law 108-199, div. H, Sec. 161, Jan. 23, 2004, 118 Stat. 452, as amended by Public Law 108-447, div. H, title V, Sec. 518, Dec. 8, 2004, 118 Stat. 3267, which provides that: “The Director of the Office of Management and Budget and all Federal agencies shall hereafter consult with Alaska Native corporations on the same basis as Indian tribes under Executive Order No. 13175.”

The Secretaries, through the Board, will provide a variety of opportunities for consultation: Commenting on proposed changes to the existing rule; engaging in dialogue at the Regional Council meetings; engaging in dialogue at the Board's meetings; and providing input in person, by mail, e-mail, or phone at any time during the rulemaking process.

This Executive Order requires agencies to prepare Statements of Energy Effects when undertaking certain actions. However, this proposed rule is not a significant regulatory action under E.O. 13211, affecting energy supply, distribution, or use, and no Statement of Energy Effects is required.

Theo Matuskowitz drafted these regulations under the guidance of Peter J. Probasco of the Office of Subsistence Management, Alaska Regional Office, U.S. Fish and Wildlife Service, Anchorage, Alaska. Additional assistance was provided by:

• Daniel Sharp, Alaska State Office, Bureau of Land Management;

• Sandy Rabinowitch and Nancy Swanton, Alaska Regional Office, National Park Service;

• Dr. Glenn Chen, Alaska Regional Office, Bureau of Indian Affairs;

• Jerry Berg, Alaska Regional Office, U.S. Fish and Wildlife Service; and

• Steve Kessler, Alaska Regional Office, U.S. Forest Service.

For the reasons set out in the preamble, the Federal Subsistence Board proposes to amend 36 CFR part 242 and 50 CFR part 100 for the 2012-13 and 2013-14 regulatory years. The text of the proposed amendments to 36 CFR 242.24, 242.25, and 242.26 and 50 CFR 100.24, 100.25, and 100.26 is the final rule for the 2010-12 regulatory period (75 FR 37918; June 30, 2010), as modified by any subsequent Federal Subsistence Board action.

We intend that any final action resulting from this proposed rule will be based on the best scientific and commercial data available and be as accurate and as effective as possible. Therefore, we request comments or information from the public, other concerned governmental agencies, the scientific community, industry, or any other interested party concerning this proposed rule to reclassify the wood bison as threatened. The comments that will be most useful and likely to influence our decisions are those that are supported by data or peer-reviewed studies and those that include citations to, and analyses of, applicable laws and regulations. Please make your comments as specific as possible and explain the basis for them. In addition, please include sufficient information with your comments (such as scientific journal articles or other publications) to allow us to authenticate any scientific or commercial information you include. We particularly seek comments concerning:

(1) Information on taxonomy, distribution, habitat selection and use, food habits, population density and trends, habitat trends, disease, and effects of management on wood bison;

(2) Information on captive herds, including efficacy of breeding and reintroduction programs, origin of parental stock, stock supplementation for genetic purposes, growth rates, birth and mortality rates in captivity, location of captive herds in comparison to wild populations, effects of captive breeding on the species, and any other factors from captive breeding that might affect wild populations or natural habitat;

(3) Information on the adequacy of existing regulatory mechanisms; trends in domestic and international trade of live specimens, sport-hunted trophies, or other parts and products; poaching of wild wood bison; illegal trade and enforcement efforts and solutions; and oversight of reintroduction or introduction programs;

(4) Information on the effects of other potential threat factors, including contaminants, changes of the distribution and abundance of wild populations, disease episodes within wild and captive populations, large mortality events, the effects of climate change, or negative effects resulting from the presence of invasive species;

(5) Information on management programs for wood bison conservation in the wild, including private, tribal, or governmental conservation programs that benefit wood bison; and

(6) Current or planned activities within the geographic range of the wood bison that may impact or benefit the species including any planned developments, roads, or expansion of agricultural enterprises.

Please note that submissions merely stating support for or opposition to the action under consideration without providing supporting information, although noted, will not be considered in making a determination, as section 4(b)(1)(A) of the Endangered Species Act (16 U.S.C. 1531 et seq. ) directs that a determination as to whether any species is a threatened or endangered species must be made “solely on the basis of the best scientific and commercial data available.”

Prior to issuing a final rule on this proposed action, we will take into consideration all comments and any additional information we receive. Such information may lead to a final rule that differs from this proposal. All comments and recommendations, including names and addresses, will become part of the administrative record.

You may submit your comments and materials concerning this proposed rule by one of the methods listed in the ADDRESSES section. We will not accept comments sent by e-mail or fax or to an address not listed in the ADDRESSES section.

We will post your entire comments—including your personal identifying information—on http://www.regulations.gov. If your written comments provide personal identifying information, you may request at the top of your documents that we withhold this information from public review. However, we cannot guarantee that we will be able to do so.

Comments and materials we receive, as well as supporting documentation we used in preparing this proposed rule, will be available for public inspection on http://www.regulations.gov, or by appointment, during normal business hours, at the U.S. Fish and Wildlife Service, Anchorage Regional Office ( see FOR FURTHER INFORMATION CONTACT ).

Section 4(b)(5)(E) of the Act provides for one or more public hearings on this proposal, if requested. We must receive requests for public hearings, in writing, at the address shown in FOR FURTHER INFORMATION CONTACT by the date shown in DATES . We will schedule public hearings on this proposal, if any are requested, and announce the dates, times, and places of those hearings, as well as how to obtain reasonable accommodations, in the Federal Register at least 15 days before the first hearing.

Section 4(b)(3)(A) of the Act requires the Service to make a finding known as a “90-day finding,” on whether a petition to add, remove, or reclassify a species from the list of endangered or threatened species has presented substantial information indicating that the requested action may be warranted. To the maximum extent practicable, the finding shall be made within 90 days following receipt of the petition and published promptly in the Federal Register . If the Service finds that the petition has presented substantial information indicating that the requested action may be warranted (referred to as a positive finding), section 4(b)(3)(A) of the Act requires the Service to commence a status review of the species if one has not already been initiated under the Service's internal candidate assessment process. In addition, section 4(b)(3)(B) of the Act requires the Service to make a finding within 12 months following receipt of the petition on whether the requested action is warranted, not warranted, or warranted but precluded by higher-priority listing actions (this finding is referred to as the “12-month finding”). Section 4(b)(3)(C) of the Act requires that a finding of warranted but precluded for petitioned species should be treated as having been resubmitted on the date of the warranted but precluded finding, and is, therefore, subject to a new finding within 1 year and subsequently thereafter until we take action on a proposal to list or withdraw our original finding. The Service publishes an annual notice of resubmitted petition findings (annual notice) for all foreign species for which listings were previously found to be warranted but precluded.

In this notice, we announce a warranted 12-month finding and proposed rule to reclassify the wood bison from an endangered species to a threatened species under the Act.

The listing history is reconstructed here based on Federal Register documents and the Code of Federal Regulations (CFR). Wood bison became listed in the United States under the 1969 Endangered Species Conservation Act when it was included on the first List of Endangered Foreign Fish and Wildlife, which was published in the Federal Register on June 2, 1970 (35 FR 8491). A column labeled “where found” indicated “Canada,” but the introduction to the list stated that “[t]he `Where Found' column is a general guide to the native countries or regions where the named animals are found. It is not intended to be definitive.”

In 1974, the first list under the 1973 Endangered Species Act appeared in the CFR. Because the wood bison was listed under the 1969 Endangered Species Conservation Act, there is not a separate Federal Register notice that defined the population(s) and analyzed threats to the species. Like the 1970 list, the list for foreign species at 50 CFR 17.11 listed the wood bison, with a “where found” column indicating “Canada.” Section 17.11 further specified that “[t]he `where found' column is provided for the convenience of the public, is not exhaustive, is not required to be given by law, and has no legal significance.”

Population-based listings, the precursor to the current Distinct Population Segments (DPS) approach first appeared with the 1975 list. In the 1975 CFR, wood bison appeared listed with “N/A” (not applicable) under “Population.” Section 17.11(b) stated that the “Population” column, along with the scientific and common names, “define[s] the `species' of wildlife within the meaning of the Act.” This section for the first time also indicated that “[t]he prohibitions in the Act and in this Part 17 apply to all specimens of the `species' listed, wherever they are found, and to their progeny.” The “Known Distribution” column for wood bison again indicated “Canada.” Paragraph (d) of § 17.11 reiterated that the “known distribution” column was “[f]or information purposes only” and also advised that the column “does not imply any limitation on the application of the prohibitions in the Act and in this Part 17. Such prohibitions apply to all specimens of the species, wherever found.” Wood bison remained listed in this manner until 1979.

In 1979, the Service published a notification in the Federal Register that questioned the listing status of the wood bison along with six other species. The notification advised that the Service had failed to follow a procedural requirement of the 1969 Act for these species (consulting with the governor of any state in which the species is found), and thus concluded that the U.S. populations of these species were not covered by the listing, although the foreign populations would continue to be covered. The notice was also clear that the Service had always intended for all populations—foreign and domestic—of all seven species to be covered by the listing. The Service followed up on the notification on July 25, 1980, with a rule for five of the species in which it proposed to include the U.S. populations in the listing to correct the procedural error (45 FR 49844). The 1980 proposed rule did not include the wood bison. The Service indicated that the procedural error did not apply to wood bison because no non-hybridized wood bison were found in the United States. If no pure wood bison occurred in the United States as of the subspecies' listing under the 1969 Act, there would have been no States to consult with and, therefore, no procedural listing error.

Although the Service had found no error with the original listing of the entire wood bison subspecies, the 1980 CFR for the first time mistakenly indicated that the listed entity for wood bison was a DPS. The CFR indicated “Canada” in the “Vertebrate population where endangered or threatened” column. The listing has remained in this form through the current CFR. Despite this 1980 designation, it is clear that the wood bison is listed at the subspecies level. The CFR through 1980 indicates the Service's intent of the original listing, and we have conducted no rulemaking since that time to change the scope of the listed entity. The entire “population” of wood bison in Canada is the full extent of the subspecies' current range and no individuals occur in the wild outside this population. Therefore, the wood bison in Canada would not qualify for a population-based listing ( i.e., a DPS).

On May 14, 1998, the Service received a petition from a private individual requesting that the Service remove the wood bison from the List of Endangered and Threatened Wildlife, primarily because it had been downlisted under CITES. In a 90-day finding published on November 25, 1998 (63 FR 65164), we found that the petitioner did not provide substantial information to indicate that the delisting may be warranted.

On November 26, 2007, we received a petition from the co-chairs of Canada's National Wood Bison Recovery Team requesting that we reclassify the wood bison from endangered to threatened. The petition contained information about recovery efforts in Canada and referred to information provided to the Service. On February 3, 2009, we published a 90-day finding (74 FR 5908) acknowledging that the petition provided sufficient information to indicate that reclassification may be warranted and that we would initiate a status review. This document represents both our 12-month finding for wood bison and a proposed rule to downlist the species.

Wood bison ( Bison bison athabascae ) belongs to the family Bovidae, which also includes cattle, sheep and goats. Debate over the generic name Bison continues with some authorities using Bos and others using Bison depending on the methodology used to determine relationships among members of the tribe Bovini (Asian water buffalo, African buffalo, cattle and their wild relatives, and bison) (Boyd et al. 2010, pp. 13-15.). In this discussion, we will use Bison, which is consistent with “Wild Mammals of North America” (Reynolds et al. 2003, p. 1010), “Mammal Species of the World” (Wilson and Reeder 2005, p. 689), and the Wood Bison Recovery Team (Gates et al. 2001, p. 25). Wood bison was first described as a subspecies in 1897 (Rhoads 1897, pp. 498-500). One other extant bison subspecies, the plains bison ( B. b. bison ), occurs in the United States and Canada. Based on the historical physical separation, and quantifiable behavioral, morphological, and phenological (appearance) differences between the two subspecies, the scientific evidence indicates that subspecific designation is appropriate (van Zyll de Jong et al. 1995, p. 403; FEAP 1990, p. 24; Reynolds et al. 2003, p. 1010; Gates et al. 2010, pp. 15-17).

Wood bison is the largest native extant terrestrial mammal in North America (Reynolds et al. 2003, p. 1015). Average weight of mature males (age 8) is 910 kilograms (kg) (2,006 pounds (lb)) and the average weight of mature females (age 13) is 440 kg (970 lb) (Reynolds et al. 2003, p. 1015). They have a large triangular head, a thin beard and rudimentary throat mane, and a poorly demarcated cape (Boyd et al. 2010, p. 16). In addition, the highest point of their hump is forward of their front legs; they have reduced chaps on their front legs; and their horns usually extend above the hair on their head (Boyd et al. 2010, p. 16). These physical characteristics distinguish them from the plains bison (Reynolds et al. 2003, p. 1015; Boyd et al. 2010, p. 16).

The exact extent of the original range of wood bison cannot be determined with certainty based on available information, but was limited to North America (Gates et al. 2001, p. 11). However, historically, the range of the wood bison was generally north of that occupied by the plains bison and included most boreal regions of northern Alberta; northeastern British Columbia east of Cordillera; a small portion of northwestern Saskatchewan; the western Northwest Territories south and west of Great Slave Lake; the Mackenzie River Valley; most of The Yukon Territory; and much of interior Alaska (Reynolds et al. 2003, pp. 1011-1012). Skinner and Kaisen (1947, pp. 158, 164) suggested that the prehistorical U.S. range extended from Alaska to Colorado, and Stephenson et al. (2001, p. 140) concluded that wood bison were present within the boundaries of what is now defined as Alaska until their disappearance during the last few hundred years. Currently, there is neither a wild population in Alaska nor the continental United States (Harper and Gates 2000, p. 917; Stephenson et al. 2001, p. 140).

During the early 1800s, wood bison numbers were estimated at 168,000, but by the late 1800s, the subspecies was nearly eliminated with only a few hundred remaining (Gates et al. 2001, p. 11). In the words of Soper (1941, p. 362), wood “bison appear to have been practically exterminated,” and based on the fate of plains bison, in which 40 to 60 million animals were reduced to just over 1,000 animals in less than 100 years (Hornaday 1889; Wilson and Strobeck 1998, p. 180), overharvest may have been the cause for the decline (Harper and Gates 2000, p. 915). The fact that populations began to rebound once protection was in place and enforced supports this idea (Soper 1941, pp. 362-363). In 1922, Wood Buffalo National Park (WBNP) was set aside for the protection of the last remnant population of wood bison. Since that time several additional herds have been established (Table 1).

Another factor that is thought to have played a role in the decline in wood bison is a gradual loss of meadow habitat through forest encroachment (Stephenson et al. 2001, p. 143; Quinlan et al. 2003, p. 343; Strong and Gates 2009, p. 439). Although not quantified, it is likely that because of fire suppression, and subsequent forest encroachment on meadows, there was a net loss of suitable open meadow habitat for wood bison throughout their range through about 1990. More intensive fire management began in Canada in the early 1900s with the philosophy that fire was destructive and should be eliminated to protect property and permit proper forest management (Stocks et al. 2003, p. 2). However, wildfire is an integral component of boreal forest ecology (Weber and Flannigan 1997, p. 146; Rupp et al. 2004, p. 213; Soja et al. 2007, p. 277). Without fire, trees encroach on meadows and eventually the meadow habitat is lost and replaced by forest.

The foraging habitats most favored by wood bison are grass and sedge meadows occurring on alkaline soils. These meadows are typically interspersed among tracts of coniferous forest, stands of poplar or aspen, bogs, fens, and shrublands. Meadows typically represent 5 to 20 percent of the landscape occupied by wood bison (Larter and Gates 1991a, p. 2682; Gates et al. 2001, p. 23). Wet meadows are rarely used in the summer, probably because of the energy required to maneuver through the mud, but they are used in late summer when they become drier, and in the winter when they freeze (Larter and Gates 1991b, pp. 133, 135; Strong and Gates 2009, p. 438). In the summer, when daily access to surface water is required for hydration, availability of water is also important (Fortin et al. 2003, pp. 223, 225).

Characteristic of other grazing ruminants, bison have a four-chambered stomach that efficiently processes and digests a diet of grasses high in roughage (Reynolds et al. 2003, p. 1019). Because they can thrive on coarse grasses and sedges, they occupy a niche within the boreal forest that is not utilized by other northern herbivores such as moose or caribou (Gates et al. 2001, p. 25). Several studies indicate that wood bison prefer sedges ( Carex spp.), which can comprise up to 98 percent of the winter diet (Reynolds et al. 1978, p. 586; Smith 1990, p. 88; Larter and Gates 1991a, p. 2679; Fortin et al. 2003, pp. 224-225). Seasonally, other important diet items include grasses, willow, and lichen (Reynolds et al. 1978, p. 586; Smith 1990, p. 88; Larter and Gates 1991a, pp. 2680-2681; Fortin et al. 2003, pp. 224-225).

Wood bison are gregarious, with cows, calves, and yearlings found in matriarchal groups ranging up to a few dozen animals (Stephenson et al. 2001, p. 125; Strong and Gates 2009, p. 438). Mature bulls seldom form groups of more than a few animals, and solitary bulls are common (Fuller 1960, p. 11). Wood bison home range size varies with age, sex, and availability of forage (Larter and Gates 1994, p. 147). Home ranges of females are larger than those of males (Larter and Gates 1994, p. 147). For wood bison in the Mackenzie Bison Sanctuary, mean area of home range for females was 897 square kilometers (km 2 ) (346 square miles (mi 2 ) and for males 433 km 2 (167 mi 2 ) (Larter and Gates 1994, p. 146). Most likely females need larger areas because they occur in larger groups than the males (Larter and Gates 1994, p. 142). The large home ranges of both sexes may be a response to limited forage availability and widely spaced meadows (Strong and Gates 2009, p. 438).

Free-ranging wood bison roam extensively with annual maximum traveling distance from each individual's center-of-activity averaging from 45 to 50 km (28 to 31 mi) (Chen and Morley 2005, p. 430). However, some captive animals released into the wild have traveled over 250 km (155 mi) (Gates et al. 1992, pp. 151-152). Herds are fluid and individuals interchange freely (Fuller 1960, p. 15; Wilson et al. 2002, p. 1545). Wood bison travel between favored foraging habitats along direct routes including established trails, roads, river corridors, and transmission lines (Reynolds et al. 1978, p. 587; Mitchell 2002, p. 50). Bison are also powerful swimmers and will cross even large rivers such as the Peace, Slave, Liard, and Nahanni to reach forage, provided that there are low banks for entry and exit (Fuller 1960, p. 5; Mitchell 2002, pp. 32, 50; Larter et al. 2003, pp. 408-412).

The wood bison's breeding season is from July to October. The age of first reproduction depends on nutritional condition and disease status and is, therefore, variable (Gates et al. 2010, p. 49). Females typically produce their first calf when they are 3 years old and may be reproductively successful up to age 20 (Wilson et al. 2002, p. 1545). Although capable of reproduction at age 2, males typically do not participate in the rut until they are 5 or 6, and reproductive success is at its maximum between ages 7 and 14 (Wilson et al. 2002, pp. 1538, 1544). Bison have a polygynous mating system, in which one male mates with several females (Wilson et al. 2002, p. 1538). When habitat is adequate and there are no other limiting factors such as disease and predation, wood bison populations have expanded exponentially (FEAP 1990, pp. 34-35; Gates and Larter 1990, p. 233). Consequently, newly introduced populations have the capacity to grow quickly, as demonstrated by the Mackenzie herd (Gates and Larter 1990, p. 235).

Wood bison are susceptible to a variety of diseases that may affect their population dynamics. The most important are anthrax, bovine brucellosis, and bovine tuberculosis, none of which are endemic to wood bison (Gates et al. 2010, pp. 28-32). Anthrax is an infectious bacterial disease that is transmitted through the inhalation or ingestion of endospores (Gates et al. 2010, p. 28). The disease is rapidly fatal with death usually occurring within several days once the clinical signs appear (Dragon et al. 1999, p. 209). Between 1962 and 1993, nine outbreaks were recorded in northern Canada, killing at least 1,309 bison (Dragon et al. 1999, p. 209). Additional outbreaks continued to occur through at least 2007 (GNT 2009, p. 13). Factors associated with outbreaks are high ambient temperatures, high densities of insects, and high densities of bison as they congregate in areas of diminishing forage and water (Dragon et al. 1999, p. 212). Sexually mature males are more susceptible than cows, juveniles, or calves, perhaps because of elevated levels of testosterone (Dragon et al. 1999, p. 211). Anthrax is not treatable in free-ranging wildlife, but captive bison can be vaccinated effectively and treated with antibiotics (Gates et al. 2001, p. 22).

Bovine brucellosis is caused by the bacterium Brucella abortus (Tessaro 1989, p. 416). Although the primary hosts are bovids, other ungulates such as elk can be infected. The disease is primarily transmitted through oral contact with aborted fetuses, contaminated placentas, and uterine discharges. Greater than 90 percent of infected female bison abort during their first pregnancy (Gates et al. 2010, p. 30). Naturally acquired immunity reduces the abortion rate with subsequent pregnancies (Aune and Gates 2010, p. 30). Male bison experience inflammation of their reproductive organs and in advanced cases, sterility. Both sexes are susceptible to bursitis and arthritis caused by concentrations of the bacterium in the joints, which may make them more susceptible to predation (Joly 2001, pp. 97-98). Two vaccines, S19 and SR B51, have been developed in an attempt to prevent bovine brucellosis (Aune and Gates 2010, pp. 30-31). S19 induces abortion in cows and is only about 39 percent effective in preventing infection (Davis et al. 1991, p. 262). SR B51 also induces abortion in pregnant cows, but calfhood vaccination appears to be an effective tool in preventing transmission of the disease (Palmer et al. 1996, p. 1607; Olsen et al. 2003, p. 22). Brucellosis is extremely difficult to eradicate in ungulates; the combined use of quarantine protocols, serum testing, slaughter, and vaccination is being explored as a means of controlling the disease (Nishi et al. 2002, pp. 230-233; Bienen and Tabor 2006, pp. 324-325; Aune and Gates 2010, p. 31).

Bovine tuberculosis is a chronic infectious disease caused by the bacterium Mycobacterium bovis (Tessaro 1989, p. 417). Historical evidence indicates that bovine tuberculosis did not occur in bison prior to contact with infected domestic cattle (Tessaro 1989, p. 416). Wood bison were infected in the 1920s when plains bison were introduced into the range of wood bison (Tessaro 1989, p. 417). Currently, the disease is concentrated in bison in and near (Wabasca, Wentzel, and Slave River Lowlands herds) WBNP. The disease is primarily transmitted by inhalation and ingestion of the bacterium, but may also pass to offspring through the placenta or contaminated milk (FEAP 1990, p. 11). Bovine tuberculosis is a chronic disease that progressively becomes debilitating; advanced cases are fatal. There is not an effective vaccine for immunization against tuberculosis (FEAP 1990, p. 2).

Wood bison herds in and around WBNP, Alberta and the Northwest Territories, Canada, are infected with brucellosis and bovine tuberculosis. These diseased herds account for about half of the free-ranging wood bison and are the only known reservoirs of tuberculosis and brucellosis among the herds (Gates et al. 2010, pp. 4, 35). Approximately 30 percent of the animals in these herds test positive for brucellosis and 21 to 49 percent test positive for tuberculosis. The combined prevalence of the two diseases is 42 percent (Tessaro et al. 1990, p. 174; Gates et al. 2010, p. 35). Wood bison cows infected with both tuberculosis and brucellosis are less likely to be pregnant, and infected herds are more likely to have their populations regulated by wolf predation (Tessaro et al. 1990, p. 179; Joly and Messier 2004, p. 1173; Joly and Messier 2005, p. 549). Unlike anthrax which occurs in outbreaks in which many animals die at one time, brucellosis and tuberculosis are chronic diseases that weaken animals over time.

In Canada, the Committee on the Status of Endangered Wildlife in Canada (COSEWIC) was established in 1977, to assess species' status and evaluate their risk of extinction. In 1978, the COSEWIC designated wood bison as endangered based primarily on the fact that there were only about 400 disease-free wood bison; 100 in a captive herd and 300 in a free-ranging herd. In 1988, wood bison was downlisted to threatened in Canada because of data presented in a status report prepared by the National Wood Bison Recovery Team which documented progress towards recovery (Gates et al. 2001, p. 28; Gates et al. 2010, p. 65). A review by the COSEWIC in 2000 confirmed that “threatened” was the appropriate designation at that time (Gates et al. 2010, p. 65).

The wood bison was placed in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) on July 1, 1975, when the treaty first went into effect. On September 28, 1997, it was downlisted to Appendix II based on a proposal from Canada that described progress in implementation of the Canadian recovery plan (Government of Canada 1997, entire). CITES Appendix-II species are not necessarily considered to be threatened with extinction now but may become so unless trade in the species is regulated. The United States voted in support of the downlisting.

Section 4(f) of the Act directs us to develop and implement recovery plans for the conservation and survival of endangered and threatened species, unless the Director determines that such a plan will not promote the conservation of the species. The Service has not developed a recovery plan for wood bison, because no wild populations of wood bison currently exist in the United States. In Canada, the National Wood Bison Recovery Team published a national recovery plan in 2001 (Gates et al. 2001) and is currently preparing a revision to the plan. The purpose of the recovery plan is to advance the recovery of the wood bison; specific criteria for delisting under SARA were not specified. Management plans for the provinces support the goals and objectives of the National Recovery Plan ( e.g., Harper and Gates 2000, p. 917; GNT 2009, p. 4). Four goals were established to advance the recovery of wood bison (Gates et al. 2001):

(1) To reestablish at least four discrete, free-ranging, disease-free, and viable populations of 400 or more wood bison in Canada, emphasizing recovery in their original range, thereby enhancing the prospects for survival of the subspecies and contributing to the maintenance of ecological processes and biological diversity.

(2) To foster the restoration of wood bison in other parts of their original range and in suitable habitat elsewhere, thereby ensuring their long-term survival.

(3) To ensure that the genetic integrity of wood bison is maintained without further loss as a consequence of human intervention.

(4) To restore disease-free wood bison herds, thereby contributing to the aesthetic, cultural, economic, and social well-being of local communities and society in general.

Revisions to the List of Endangered and Threatened Wildlife (adding, removing, or reclassifying a species) must reflect determinations made in accordance with sections 4(a)(1) and 4(b) of the Act. Section 4(a)(1) requires that the Secretary determine whether a species is endangered or threatened, as defined by the Act, because of one or more of the five factors outlined in section 4(a)(1). In other words, an analysis of the five factors under 4(a)(1) can result in a determination that a species is no longer endangered or threatened. Section 4(b) requires the determination made under section 4(a)(1) be based on the best scientific and commercial data available and after taking into account those efforts, if any, being made by any State or foreign nation to protect such species. In the absence of a recovery plan for wood bison in the United States, we rely on the five-factor analysis and progress towards meeting the recovery goals outlined in the Canadian recovery plan in this proposed rule to determine if it is appropriate to reclassify wood bison. We also take into consideration the conservation actions that have occurred, are ongoing, and are planned.

In 1978, there was one free-ranging, disease-free herd with 300 individuals, the MacKenzie herd (Table 1). By 2000, when the last Canadian status review was conducted, the number of disease-free herds had grown to 6, with a total of approximately 2,800 individuals (Table 1). Since 2000, an additional herd has been established bringing the total number to 7, and the number of disease-free, free-ranging bison has increased to approximately 4,400 (Table 1). Four of the herds have a population of 400 or more, meeting recovery goal number 1 (Table 1). The free-ranging, disease-free herds are discussed in detail below.

The Mackenzie bison herd was established in 1963 with the translocation of 18 wood bison that were originally captured in an isolated area of WBNP. This herd is currently the largest free-ranging, disease-free herd of wood bison, with approximately 1,600 to 2,000 animals (Reynolds et al. 2004, p. 7). The Mackenzie Bison Sanctuary was established in 1979 and encompasses an area of 6,300 km 2 (2,432 mi 2 ) northwest of Great Slave Lake. The current range of the Mackenzie bison herd (12,000 km 2 (4,633 mi 2 )) extends well beyond the boundaries of the sanctuary. Habitat protection within the range of the Mackenzie bison herd is facilitated through the SARA, Canada's equivalent to the Act, and the Mackenzie Valley Resource Management Act of 1998. Although the Mackenzie Valley Resource Management Act does not specifically provide protection to wood bison, it did create a Land and Water Board (LWB), which is given the power to regulate the use of land and water, including the issuance of land use permits and water licenses. Under current management, an annual harvest is allowed (described in Factor B below), and the Mackenzie herd size has been greater than the recovery target of 400 since 1987, with approximately 1,600 to 2,000 animals (Gates and Larter 1999, p. 233; Table 1). Thus, the Mackenzie herd contributes to recovery goals 1 and 4.

Five releases of wood bison totaling 170 animals from 1988 to 1991 established the Aishihik herd in southwestern Yukon, in a remote area west of Whitehorse, Canada. Herd size has totaled over 400 since 1999 (Gates et al. 2001, p. 14; Table 1). With a current population of approximately 1,000 animals, it is the second-largest herd. The herd inhabits approximately 9,000 km 2 (3,475 mi 2 ) of largely undeveloped habitat near the community of Haines Junction, adjacent to Kluane National Park. Less than 5 percent of the range of the Aishihik herd is on private lands (First Nation Settlement Lands), and these landowners participate in a management planning team specifically for this herd. The remainder of the herd's range is owned by the Government of Canada, and there are no threats to habitat in this area (Reynolds et al. 2004, p. 9). The herd has room to expand or shift its range, because there are no large-scale developments east, west, or north of the present range for several hundred kilometers. Small-scale agricultural development to the south of the present range, however, could restrict range expansion in that direction (Reynolds et al. 2004, p. 9). Regulated hunting occurs on this herd (described in Factor B below). Other than regulated harvest, no other limiting factors have been identified (Reynolds et al. 2004, p. 17). The Aishihik herd contributes to recovery goals 1, 2, and 4.

The Hay-Zama herd was established in 1984, when 29 wood bison were transferred from Elk Island National Park to the holding corral site near Hay-Zama Lakes, Alberta (Gates et al. 2001, p. 17). A herd of 48 wood bison became free-ranging when portions of the corral they were being held in collapsed in 1993 (Gates et al. 2001, p. 17). Since then, the free-ranging herd has grown to approximately 750 animals (Table 1), thus contributing to recovery goals 1, 2, and 4. In 1995, the Government of Alberta established a 36,000 km 2 (13,900 mi 2 ) Bison Management Area around the Hay-Zama herd in the northwestern corner of the province. In this area, all wood bison are legally protected from hunting under Alberta's Wildlife Act; outside of the area they are not protected. Collisions with vehicles are the largest source of known mortality for individuals in this herd (Mitchell and Gates 2002, p. 9).

The Nahanni herd, established in 1980 with the release of 28 wood bison, occurs primarily in southeast Yukon and northeast British Columbia. Population size has been approximately 400 animals or more since 2004 (Table 1). Availability of suitable habitat may limit this herd's size (Gates et al. 2001, p. 17). The Nordquist herd was established in 1995, near the Laird River in northeastern British Columbia (Table 1). Because the majority of the herd occupies habitat near the Alaska Highway, vehicle collisions are the primary source of mortality (Reynolds et al. 2009, p. 6). It is anticipated that the Nordquist and Nahanni herds will eventually coalesce into one herd because of their close proximity and the presence of river corridors that provide travel corridors (Gates et al. 2001, p. 18). Although it has not yet occurred, combination of the two herds would create a herd with numbers that exceed the recovery criterion of 400 (Table 1).

The Etthithun herd was established in 2002, near Etthithun Lake, British Columbia. Factors limiting the size of this herd include the amount and location of suitable habitat, conflicts with humans and industrial development, and potential contact with commercial plains bison (BC MOE, pers. comm., 2010). Current population size is approximately 124 (Table 1); consequently, this herd does not currently meet the recovery criterion of 400 individuals. However, it does contribute to recovery goals 2 and 4.

The Chitek Lake herd was established in 1991, in Manitoba, Canada. The Chitek Lake Wood Bison Management Committee plans to maintain the herd at approximately 300 animals to keep the herd within carrying capacity of the habitat. The 100,300 hectare (ha) (25,452 acre (ac)) Chitek Lake Park Reserve provides habitat protection for the core range of the herd. Limiting factors for the herd include accidental mortality from drowning, starvation in bad winters, and predation from wolves (Manitoba Conservation, pers. comm., 2010). Although outside of the historic range of wood bison, Chitek Lake herd plays an important role in wood bison conservation because it is an isolated disease-free herd and, consequently, provides security to the species through population redundancy, thus contributing to recovery goal 2.

In addition to the free-ranging wood bison herds discussed above, four captive herds have been established, although only three are currently viable. The Elk Island National Park herd in Alberta, Canada, was established in 1965 from wood bison transferred from an isolated portion of WBNP. It is the national conservation herd and has provided disease-free stock for six of the free-ranging populations and several captive breeding herds in zoos and private commercial ranches (Gates et al. 1992, p. 153). Carrying capacity at Elk Island National Park is approximately 350 animals; animals above this number are regarded as surplus and are removed to establish and supplement free-roaming populations in former areas of their historic range (Parks Canada 2009a, unpaginated). Although the herd is fenced, the animals are semi-wild and spend the majority of their time roaming the 65 km 2 (25 mi 2 ) enclosure, interacting with the environment in a largely natural manner (Gates et al. 2001, p. 18). The herd is rounded up annually to test for disease and to vaccinate for common cattle diseases. The age, sex, and condition of all the individuals are determined to inform management decisions. Using this information, individuals are selected for sale, donation, or the establishment of new herds, which also controls the population size of the herd (Parks Canada 2009b, unpaginated). This conservation herd contributes to recovery goals 2, 3, and 4.

The Hook Lake Wood Bison Recovery Project was initiated to establish a captive, disease-free herd from a wild herd infected with brucellosis and tuberculosis. The overall objective of the project was to determine the feasibility of genetic salvage from a diseased herd (Nishi et al. 2002, p. 230). Specific objectives of the project were to conserve the genetic integrity of the wild herd by capturing an adequate number of calves; provide intensive veterinary and preventative drug treatment to eliminate disease from the calves; and raise a disease-free herd from the salvaged calves (Nishi et al. 2002, p. 229). From 1996 to 1998, 62 calves were captured. The disease eradication protocol included orphaning new-born wild-caught calves to minimize their exposure to B. abortus and M. bovis, testing calves for antibodies to brucellosis prior to inclusion in the new herd, treatment with antimycobacterial and anti- Brucella drugs, and intensive whole-herd testing for both diseases (Nishi et al. 2002, p. 229). By 2002, the herd size was 122. In 2006, after 9 years of intensive management, the herd was destroyed because bovine tuberculosis was discovered in 2005 in 2 founding animals and 10 captive-born animals, even though all animals initially tested disease-free. The herd provided valuable information on genetic salvage, genetic management, captive breeding for conservation, disease testing, and the difficulties involved in eradicating disease (Wilson et al. 2003, pp. 24-35). The Hook Lake Herd contributed to recovery goal 3.

In April 2006, 30 wood bison calves were transferred from Elk Island National Park to Lenski Stolby Nature Park near Yakutsk, Sahka Republic (Yakutia), Russia. An additional 30 head are to be transferred in 2011. Although outside the historical range, this was an opportunity to create another geographically separate population which provides added security to the species through population redundancy, thereby contributing to recovery goal 2. Transfer of wood bison to Russia was specifically mentioned in the recovery plan because it would contribute to the global security of the species (Gates et al., 2001, p. 14).

In June 2008, 53 disease-free wood bison were transferred from Elk Island National Park to the Alaska Wildlife Conservation Center in Portage, Alaska. Consequently, this captive herd currently contributes to recovery goal number 2 through population redundancy. Ultimately, the Alaska Department of Fish and Game (ADFG) plans to restore wood bison populations in one to three areas in interior Alaska, with potential herd size of 500 to 2,000 or more depending on the location (ADF&G 2007, p. 79). Environmental analysis of the project is currently under review. The National Wood Bison Recovery Team in Canada recommended establishing one or more populations in Alaska in areas that can support 400 or more animals (Gates et al. 2001, p. 31). Establishment of one or more herds in Alaska would be a significant contribution to increasing the number of secure, disease-free, free-roaming herds.

In summary, since 1978, the number of free-ranging, disease-free herds has increased from 1 to 7, and the number of wood bison has increased from approximately 400 to over 4,000. The first recovery goal of establishing 4 free-ranging, disease-free herds with 400 or more animals has been met, and planning is underway to create one or more herds in Alaska. Although the number of herds needed to meet recovery goal 2 was not specified, progress has been made on the second goal with the establishment of disease-free herds in Russia; Manitoba, Canada; and Alaska. The Hook Lake Bison Recovery Project was a well-planned, science-based attempt to conserve the genetic diversity of a diseased herd and would have contributed greatly to recovery goal 3. Although ultimately the project was unsuccessful, a great deal of knowledge was gained (Wilson et al. 2003, pp. 62-67). The wood bison recovery team is very aware of the need to maintain genetic diversity in the herds and establishes new herds with the goal of maintaining genetic diversity through multiple introductions ( i.e., the Aishihik herd and Hook Lake herd). The establishment of six additional herds on the landscape since 1978 contributes to recovery goal 4. In addition, the captive population at Elk Island National Park has provided disease-free stock for those six additional herds and two captive herds. It is clear that there is active management of the herds, and multiple avenues of research are being funded and pursued regarding the biology and management of wood bison. Progress towards the recovery goals outlined in the national recovery plan, published by the National Wood Bison Recovery Team, is moving forward steadily.

Section 4 of the Act and implementing regulations (50 CFR part 424) set forth procedures for adding species to, removing species from, or reclassifying species on the Federal Lists of Endangered and Threatened Wildlife and Plants. Changes in the List can be initiated by the Service or through the public petition process. Under section 4(a)(1) of the Act, a species may be determined to be endangered or threatened based on any of the following five factors:

(A) The present or threatened destruction, modification, or curtailment of its habitat or range;

(B) Overutilization for commercial, recreational, scientific, or educational purposes;

(C) Disease or predation;

(D) The inadequacy of existing regulatory mechanisms; or

(E) Other natural or manmade factors affecting its continued existence.

We must consider these same factors in downlisting a species. In making this 12-month finding on the petition, we evaluate whether the species must be listed as endangered or threatened because of one or more of the five factors described in section 4(a)(1) of the Act. For species that are already listed as endangered or threatened, we evaluate both the threats currently facing the species and the threats that are reasonably likely to affect the species in the foreseeable future following the delisting or downlisting and the removal or reduction of the Act's protections.

Under section 3 of the Act, a species is “endangered” if it is in danger of extinction throughout all or a significant portion of its range and is “threatened” if it is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range. “Foreseeable future” is determined by the Service on a case-by-case basis, taking into consideration a variety of species-specific factors such as lifespan, genetics, breeding behavior, demography, threat projections timeframes, and environmental variability. The word “range” in the phrase “significant portion of its range” (SPR) refers to the range in which the species currently exists, and the word “significant” refers to the value of that portion of the range being considered to the conservation of the species.

For the purposes of this analysis, we will evaluate all five factors currently affecting, or that are likely to affect, the wood bison to determine whether the currently listed species is threatened or endangered.

Wood bison depend on a landscape that includes sufficient grasslands and meadows for foraging habitat (Larter and Gates 1991b, p. 133). It appears that primarily through fire suppression, there was an overall loss of meadow habitat in Canada through the 1900s. More intensive fire management began in Canada in the early 1900s with the philosophy that fire was destructive and should be eliminated to protect property and permit proper forest management (Stocks et al. 2003, p. 2). However, wildfire is an integral component of boreal forest ecology (Weber and Flannigan 1997, p. 146; Rupp et al. 2004, p. 213; Soja et al. 2007, p. 277). Without fire, trees encroach on meadows and eventually the meadow habitat is lost and replaced by forest.

Fire alone, or in combination with grazing, can facilitate the conversion and maintenance of grasslands (Lewis 1982, p. 24; Chowns et al. 1997, p. 205; Schwarz and Wein 1997, p. 1369). Burning by Native groups within the range of wood bison was apparently a common practice through the 1940s outside WBNP but ended within the park when it was established in 1922 (Lewis 1982, pp. 22-31; Schwarz and Wein 1997, p. 1369). An examination of aerial photographs taken at WBNP over time showed that a semi-open grassland that covered about 85 ha (210 ac) in 1928 supported a grassland of only 3 ha (7.4 ac) in 1982 (Schwarz and Wein 1997, p. 1369). In addition, a number of sites previously identified as prairie are now dominated by trembling aspen (Schwarz and Wein 1997, p. 1369). Although not quantified, it is likely that because of fire suppression and forest encroachment on meadows, there was a net loss of suitable open meadow habitat for wood bison throughout their range through about 1990. More recently, several factors may be counteracting the loss of open meadow habitat including controlled burns, timber harvest, oil and gas development, and the effects of climate change, as discussed below.

Controlled burns have been implemented since 1992 in wood bison habitat in the Northwest Territories to increase meadow habitat (Chowns et al. 1997, p. 206). Approximately 4,400 to 26,900 ha (10,873 to 66,471 ac) were burned from 1992 to 1997 with some sites being burned up to three times (Chowns et al. 1997, pp. 206-207). In addition, lightning fires burned 300,000 ha (741,316 ac), or almost 20 percent of the wood bison range in this area, from 1994 to 1996 (Chowns et al. 1997, p. 209). Plants favored by bison were more abundant in unburned areas and in meadows that had burned only once (Quinlan et al. 2003, p. 348), indicating that prescribed burns must be used judiciously to be effective in creating foraging habitat for wood bison. A study of vegetation recovery and plains bison use after a wildfire near Farewell, Alaska (Campbell and Hinkes 1983, p. 18) showed that grass and sedge-dominated communities increased from 38 percent to approximately 97 percent of the study area. Plains bison use also increased in subsequent years after the fire, and winter distribution of the Farewell herd expanded due to fire-related habitat changes (Campbell and Hinkes 1983, pp. 18-19). Because sedges are important winter forage for wood bison, the amount of such habitat has a major influence on herd size. Newly created habitats will be used by wood bison when these habitats are contiguous with existing summer or winter ranges (Campbell and Hinkes 1983, p. 20).

In summary, studies that have looked at the exclusion of fire or the effect of wildfire on wood bison habitat have concluded that fire is a necessary component of the landscape to maintain clearings and create conditions that favor forage preferred by wood bison. Controlled burns can have the same effect as wildfire by creating openings in the forest. However, repeated burns in the same location can be detrimental to creating suitable forage.

The volume of timber logged in Canada rose 50 percent from 1970 to 1997; in Alberta, the logging rate increased 423 percent from 3.4 to 17.8 million m 3 (120 to 628 million feet (ft) 3 ) per year during the same time (Timoney and Lee 2001, p. 394). These values are conservative because forests logged on private land and those harvested on government land after fire, insect outbreaks, or disease may go unrecorded (Timoney and Lee 2001, p. 395). The primary method of harvest is clearcutting (Timoney and Lee 2001, p. 394). Compared to a closed canopy forest, clearcuts improve the amount of suitable habitat available to wood bison because they create openings and increase the amount of summer forage available. However, the quantity and quality of forage is less than what is found in preferred wood bison foraging habitats, and the increased productivity seen after a clearcut is not maintained, as woody vegetation becomes more dominant over time (Redburn et al. 2008, p. 2233). In addition, clearcuts do not provide adequate winter forage because wood bison's preferred food, sedges, typically do not colonize these areas. Clearcutting is not being used as a management tool to increase wood bison habitat currently, and whatever gains in habitat that have occurred from clearcutting are most likely low.

In summary, although timber harvest occurs throughout the range of wood bison, it is unclear to what extent it is creating suitable habitat. Clear cuts can increase summer forage, but they need to be in proximity to sedge meadows (wintering habitat) to increase the annual carrying capacity for wood bison, and the openings created by the clear cuts must be maintained over time. Although timber harvest has the potential to increase the amount of suitable habitat for wood bison, the amount that may have been created is most likely low and is undocumented.

Oil and gas exploration and production in Canada has increased in the last 20 years (Timoney and Lee 2001, pp. 397-398). Seismic mapping to determine the oil and gas reserves below the surface involves cutting paths 5 to 8 meters (m) (16.4 to 26 ft) wide across the landscape. The seismic lines become persistent features in the forested boreal landscape (Lee and Boutin 2006, p. 249). Approximately 70 percent of landscape disturbance for non-renewable resource extraction in Alberta is due to seismic lines (Timoney and Lee 2001, p. 397). There are an estimated 1.5 to 1.8 million km (932,000 to 1,100,000 mi) of seismic lines in Alberta (Timoney and Lee 2001, p. 397). Lee and Boutin (2006, p. 244) found that only 8.2 percent of seismic lines in Alberta's northeastern forested stands recovered to greater than 50 percent woody vegetative cover after 35 years, and 64 percent of these seismic lines maintained a cover of grasses and herbs. In terms of creating forest openings, more suitable foraging habitat, and linear paths, seismic lines may be beneficial for wood bison. However, because vehicular routes were established in 20 percent of the seismic lines, they also become corridors for off-road vehicles, recreationalists, and poachers (Trombulak and Frissell 2000, pp. 19-20; Timoney and Lee 2001, p. 400; Lee and Boutin 2006, p. 244). Although wood bison are known to occupy linear clearings such as roads, and seismic lines have increased dramatically within their range, potentially creating suitable habitat, we do not have documentation of wood bison use of this type of habitat.

The popularity of bison as an alternative to beef in human diets has led to a growth of commercial bison ranches in Canada and the United States (Gates et al. 1992, p. 155). Exports of bison meat from Canada doubled to over 2 million kilograms (2.3 tons) from 2001 to 2006 (Statistics Canada 2009a, unpaginated). Plains bison dominate agricultural production in Canada because commercial production of this subspecies has been in place much longer than it has been for wood bison (Gates et al. 1992, p. 156; Harper and Gates 2000, p. 919). Bison production in Canada is concentrated in the western provinces, within the historical range of wood bison. In 2006, there were 195,728 plains bison on 1,898 farms reporting in the Canadian National Census; an increase of 35 percent from 2001 (Statistics Canada 2009b, unpaginated). Thus, plains bison represented approximately 95 percent of the total bison on the landscape in Canada in 2006. Existence and expansion of commercial plains bison production reduces the amount of land available for wild wood bison populations and increases the risk of hybridization when plains bison escape captivity (Harper and Gates 2000, p. 919; Gates et al. 2001, pp. 24, 29). Demand currently exceeds supply; therefore, expansion of commercial plains and wood bison operations is expected to continue (Gates et al. 2001, p. 24)

Escape of plains bison from fenced enclosures within the range of the wood bison in Canada poses a threat to the genetic integrity of wood bison (Gates et al. 1992, p. 156; Gates et al. 2001, p. 24). Because of their size, strength, and undomesticated nature, typical fences are insufficient to restrain bison (FEAP 1990, p. 29; Harper and Gates 2000, p. 919). Maintenance of fences can be a challenge in harsh environments where tree-fall, snow, ice, and frost heave can impair the integrity of the fence and necessitate frequent repairs. The import of plains bison to a private ranch near Pink Mountain, British Columbia, led to the establishment of a free-ranging herd of plains bison after they escaped their enclosure (Gates et al. 1992, p. 156).

In addition to commercial production, free-ranging, publicly managed plains bison herds have been established outside their historical range and within the historical range of wood bison in Alaska and Canada (Gates et al. 2010, p. 56). Because of the potential for hybridization, these herds limit where wood bison can be reintroduced. Five plains bison herds occur in Alaska and one occurs in British Columbia, Canada (Gates et al. 2010, p. 56). None of these plains bison herds occur in close proximity to free-ranging wood bison herds with the exception of one herd—the Pink Mountain herd, British Columbia, which also occupies habitat that could have been used for wood bison (Harper et al. 2000, p. 11). Preventing interbreeding between free-ranging plains bison and wood bison is a management objective in British Columbia and is accomplished by maintaining a large physical separation between the herds and having a management zone around the plains bison herd that allows harvest of plains bison within this zone (Harper et al. 2000, p. 23).

Agricultural development, including plains bison ranching, is the least compatible land use for wood bison recovery (Harper and Gates 2000, p. 921). Loss of habitat for agricultural production is a threat to wood bison because of the large areas involved. Agricultural development near Fort St. John and Fort Nelson, British Columbia, has reduced habitat for wood bison, and continuing expansion of agriculture in the north will further limit the ability to meet population recovery objectives (Harper and Gates 2000, p. 921). Based on a conservative estimate of historical habitat only in Canada, Gates et al. (1992, p. 154) estimated that human activities and development exclude wood bison from approximately 34 percent of their historic range. When an updated Canadian historical range (Stephenson et al. 2001, p. 136) and the Alaskan historical range are included in the calculation, the amount of compromised habitat drops to approximately 16.5 percent if only Canada is considered, and 13 percent if the historical habitat in Canada and Alaska are combined (Stephenson 2010, pers. comm.). Sanderson et al. (2002, pp. 894-896; 2008, p. 257) found that the level of human influence in the range occupied by wood bison to be extremely low (less than 10 percent). Although human development and influence is very low over the majority of range occupied by wood bison, we assume that because of human population growth, increased commercial production of plains bison, and increased agricultural production, there will be continued loss of suitable wood bison habitat into the foreseeable future.

Climate change models project that the largest temperature increases will occur in the upper latitudes of the northern hemisphere, and that there will be an increase in extreme climate events in these areas (IPCC 2007, 11.5.3.1). This area includes the boreal forest of Canada and Alaska in the range of wood bison. Some of the predicted outcomes of climate change are: an increase in temperature; an increase in insect outbreaks; an increase in wildfire severity, area burned, and fire season length with potential landscape scale ecotype effects; and a shift northward of boreal forest (Hamann and Wang 2006, pp. 2780-2782; Soja et al. 2007, p. 277). These aspects of climate change have the potential to increase the amount of habitat suitable for wood bison over the next 100 years.

The mean annual temperature of interior Alaska and northern Canada has increased by 2 degrees Celsius (°C) (3.6 degrees Fahrenheit (°F)) in the last four decades (Serreze et al. 2000, p. 163). Warming has triggered bark beetle outbreaks in western North America, including south-central Alaska and British Columbia. In British Columbia, by the end of 2006, 130,000 km 2 (50,193 mi 2 ) of forested lands were affected (Kurz et al. 2008, p. 987). The outbreak in British Columbia was an order of magnitude greater in area and severity than all previous recorded outbreaks (Kurz et al. 2008, p. 987). In the boreal regions of Alaska, the cumulative insect damage from 1993 to 1998 was 1.6 to 2.4 million ha (3.9 to 5.9 million ac) (Matthews 1997, p. 4; Malström and Raffa 2000, p. 36) with 90 percent of the spruce on the Kenai Peninsula being affected (Soja et al. 2007, p. 282).

The warmer minimum winter temperatures increased survival of beetles during the winter, while increased summer temperatures and reduced summer precipitation stressed the trees and contributed to the intensity of the bark beetle infestation (Kurz et al. 2008, p. 987). In addition, the warmer temperatures quickened the maturation rate of the beetles from 2 years to 1 year, hastening population growth (Berg et al. 2006, p. 219; Werner et al. 2006, p. 195). The effect of insect outbreaks on wood bison habitat includes a potential increase in suitable wood bison habitat, and an increase in susceptibility to fire. In insect-infested plots studied on the Kenai Peninsula, cover of bluejoint grass ( Calamagrostis canadensis ), a summer forage species, increased to more than 50 percent compared to uninfested forest stands (Werner et al. 2006, p. 198). These results indicate forests affected by beetle kill may become more suitable to wood bison by creating openings and changing the vegetative composition. This would be particularly true in areas where, because of climate change, there was a permanent change in landscape cover from forest to grassland (Rizzo and Wiken 1992, p. 53; Flannigan et al. 2000, pp. 226-227). Werber and Flannigan (1997, p. 157), and Malmström and Raffa (2000, p. 36), indicate that insect outbreaks increase an area's susceptibility to fire ignition and spread.

Since the mid-1980s, wildfire frequency in western forests has nearly quadrupled compared to the average frequency during the period 1970-1986. The total area burned is more than six and a half times the previous level (Westerling et al. 2006, p. 941). In addition, the average length of the fire season during 1987-2003 was 78 days longer compared to that during 1970-1986, and the average time between fire discovery and control was 29.6 days longer (Westerling et al. 2006, p. 941). In Alaska, the largest fire on record was in 2004, and the third largest was in 2003 (Soja et al. 2007, p. 281).

The area burned by forest fires in Canada has increased over the past 4 decades (Stocks et al. 2003, p. 2; Gillett et al. 2004, p. 4; Soja et al., 2007, p. 281). In Canada, weather/climate is the most important natural factor influencing forest fires (Gillett et al. 2004, p. 2; Flannigan et al. 2005, p. 1). Projections based on the Canadian and Hadley General Circulation Models, which predict future carbon dioxide and temperature increases, indicate that the area burned in boreal forests of Canada will double by the end of the century (Flannigan et al. 2005, pp. 11-12), the area exhibiting high to extreme fire danger will increase substantially, and the length of the fire season will increase (Stocks et al. 1998, pp. 5-11).

In the absence of fire, vegetation changes would occur relatively slowly in response to relatively slow changes in the climate. Because of its immediate and large-scale effect, fire is seen as an agent of change that will hasten the modification of the landscape to a new equilibrium with climate. Area burned may overshadow the direct effects of climate change on plant species distribution and migration (Werber and Flannigan 1997, p. 157). The new fire regime is expected to affect the age class distribution, species composition, landscape mosaics, and boundaries, including a retraction of the southern boreal forest (Werber and Flannigan 1997, pp. 157, 160).

The increase in temperature, predicted by the Canadian and Hadley General Circulation Models described above, is expected to cause major shifts in ecosystems (Rizzo and Wiken 1992, p. 37; Hogg and Schwarz 1997, p. 527). The amount of grassland in Canada may increase by about 7 percent and shift northward (Rizzo and Wiken 1992, p. 52). Several modeling efforts suggest that boreal forests will shift northward into the area now characterized as subarctic (Rizzo and Wiken 1992, pp. 48-50; Rupp et al. 2002, p. 214). These changes may favor the expansion of suitable habitat for wood bison over the next century. Because one of the anticipated outcomes under climate change and the new fire regime is a retraction of the southern boreal forest and expansion of grasslands, we anticipate that habitat for wood bison, which require meadows intermixed with forest, will increase over the next century.

Our analysis of habitat threats to wood bison under Factor A includes management actions that are being taken (controlled burns, timber harvest, oil and gas development), anticipated changes to the landscape based on climate change (increased insect outbreaks, increased fire, ecotype transition), and agricultural development. In summary, most likely there was loss of suitable meadow foraging habitat for wood bison from fire suppression in the 20th century. Several factors including fire, timber harvest, oil and gas exploration, and insect infestations could create more forest openings and grassland habitat. However, neither the loss, nor potential gain in habitat from these sources has been quantified, and the suitability of habitat for wood bison created as a by-product of resource development is largely unknown. The primary loss of habitat for wood bison has occurred from agricultural development (including commercial production of plains bison). Although the current level of human influence in the range of wood bison is low, we anticipate human population growth will continue, and loss of suitable habitat from agricultural development is expected in the foreseeable future. In the short term, habitat loss is expected to outstrip gain because of the increasing demand and production of commercial bison. Based on model projections of the effects of climate change, it is anticipated that there will be increased insect infestations, increased fire frequency and area burned, and warmer temperatures, leading to shifts in ecosystems. In the long term, these changes will likely create more forest openings and landscapes in early successional stages and may increase the amount of suitable habitat available to wood bison. Whether the potential gain in habitat will offset the loss from development in the long term is unknown. Consequently, based on the best scientific and commercial data available, we conclude that loss of habitat remains as a significant threat to wood bison in the foreseeable future.

Overharvesting for the fur trade and westward expansion by Europeans resulted in near extinction of wood bison by the late 1800s (Gates et al. 1992, pp. 143-145). Currently, the utilization of free-ranging, disease-free wood bison populations is closely regulated and managed for sustainability. Under the Species at Risk Act (SARA), a species listed as threatened may not be killed on Federal lands such as National Parks or National Wildlife Areas, except where permitted under a national recovery strategy (GNT 2009, p. 15). Harvest is used as a recovery management tool to regulate herd size when other limiting factors, such as predation or disease, do not. Without harvest, herd size can expand beyond the carrying capacity of the landscape, may grow to the point where overlap with either plains bison or diseased herds is more likely, or may expand into areas such as highway right-of ways. Regulated harvest is allowed from the disease-free Mackenzie herd, Nahanni herd (quota of two bison annually), the Aishihik herd, and the Hay-Zama herds under permit systems controlled by the respective territorial wildlife agencies, and is managed on a conservative sustained-yield basis. The regulated harvests for the Mackenzie, Aishihik, and Hay-Zama herds are described below.

Hunting of the Mackenzie wood bison herd is regulated under a quota system based on population size, and through consideration of Native community interests in subsistence hunting, through a co-management process with the Fort Providence Resource Management Board. Regulated hunting was initiated in 1987. Non-resident hunting licenses were first issued for the winter hunt in 1992/1993. The quota for resident and non-residents has been adjusted over time based on herd size and community input. The allowable quota for harvest has never been taken and has ranged from 20 to 93.6 percent of the quota (Reynolds et al. 2004, p. 39). The current annual allowable harvest is 47 bison, which is 2.5 percent of the population estimate (Reynolds et al. 2004, pp. 15, 39).

Sport hunting is the primary method of regulating the growth of the Aishihik herd, because natural predation on the herd is low. The Yukon Wood Bison Technical Team provides advice on wood bison management that is sensitive to local conditions ( i.e., to remove wood bison from highway right-of-ways, competition of bison with other native ungulates), and consistent with the National Wood Bison Recovery Plan (Yukon Environment 2009, p. 1). The annual allowable harvest is determined each year based on population size and calf recruitment rate. Harvest from 1999 to 2007/2008 winter season ranged from 65 to 75 animals. In the 2008/2009 winter season, the allowable harvest increased to 200 because the population continued to grow under the old quota. Increased harvest is expected to restrict the movement of wood bison away from their traditional range, address highway safety concerns, and achieve bison management objectives (Government of Yukon 2009, p. 1). Resident, non-resident, and First Nations hunters are required to have a permit to hunt wood bison. Harvest regulations are strictly enforced by Yukon Department of Environment conservation officers, often in collaboration with local First Nations Game Guardians.

Hunting in the Hay-Zama herd began in 2008 for the first time. Hunting was initiated to regulate the population size, reduce wood bison conflicts with humans in the communities of Zama City and Chatey, reduce wood bison-vehicle collisions on two highways, and limit wood bison distribution eastward, preventing potential contact with diseased bison from WBNP (Government of Alberta 2010a, unpaginated). Harvest removed 128 and 155 animals in the 2008/09 and 2009/10 seasons, respectively (Government of Alberta 2010b, unpaginated). Three hundred licenses were issued each year, 200 to Aboriginal hunters and 100 to recreational hunters. Because the objectives of reducing herd size and human conflicts have been met, the total number of licenses has been reduced in the 2010/11 season to 105 (Government of Canada 2010b, unpaginated). Based on the success rate of the past two seasons, approximately 50 animals will likely be harvested. It is estimated that a population objective of 400-600 wood bison can be sustained by harvesting approximately 60 to 70 animals per season (Government of Canada 2010b, unpaginated).

In addition to regulating herd size, harvest is also used to prevent the spread of bovine tuberculosis and brucellosis infection in wood bison. Under the Northwest Territories Big-Game Hunting Regulations, hunters may shoot any bison sighted within the Bison Control Area (BCA), an area located between the WBNP diseased herd and the Mackenzie and Nahanni disease-free herds. The goal is to reduce the risk of bovine tuberculosis and brucellosis infection of the Mackenzie and Nahanni herds by removing infected animals dispersing from WBNP (see discussion under Factor C). Thirteen bison were removed from the BCA in the mid-1990s (Nishi 2002, pp. 12-13). There is currently no authorized harvest of wood bison in British Columbia.

Under Canada's SARA, all collection of listed species such as wood bison for scientific purposes is closely regulated. Scientific research on disease, genetics, diet, and other aspects of wood bison life history can and has been done using animals that have been legally taken by hunters, animals that died through natural factors, or road kill ( e.g., Tessaro et al. 1990, p. 175). Scientific research must relate to the conservation of the species and be conducted by qualified persons; the activity must benefit the species or enhance its chance of survival in the wild. In addition, activities affecting the species must be incidental to carrying out an otherwise lawful activity. Researchers must demonstrate awareness of the provisions of SARA, that measures are being taken to minimize harm to listed species, and that the most effective measures for minimizing harm are adopted.

Harvest of wood bison does not occur and only a small number of wood bison have been sporadically taken from disease-free herds for display in zoos or wildlife parks. This occurs only when surplus animals are available and these surplus animals have typically come from Elk Island National Park (Gates et al. 2010, p. 81).

The wood bison was placed in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) on July 1, 1975, when the treaty first went into effect. CITES is an international agreement between governments to ensure that the international trade of CITES-listed plant and animal species does not threaten species' survival in the wild. There are currently 175 CITES Parties (member countries or signatories to the Convention). Under this treaty, CITES Parties regulate the import, export, and reexport of CITES-protected plants and animal species (also see Factor D). Trade must be authorized through a system of permits and certificates that are provided by the designated CITES Scientific and Management Authorities of each CITES Party (CITES 2010, unpaginated). Species included in CITES Appendix I are considered threatened with extinction, and international trade is permitted only under exceptional circumstances, which generally precludes commercial trade.

Beginning in 1993, the European Economic Community CITES Working Group authorized the import of wood bison trophies from the Mackenzie population, one of the disease-free herds with regulated harvest. On September 28, 1997, the wood bison was downlisted to Appendix II based on a proposal from Canada, which described progress made in recovery plan implementation (Government of Canada 1997, entire). The United States voted in support of the downlisting. Appendix II allows for regulated trade, including commercial trade, as long as the exporting country issues a CITES permit based on findings that the specimen was legally acquired and the export will not be detrimental to the survival of the species.

Between the time the wood bison was first listed in CITES in 1975 and 2009, 169 CITES-permitted shipments have been reported to the United Nations Environment Programme-World Conservation Monitoring Center (UNEP-WCMC). Of these, 132 shipments have occurred since 1997, when the wood bison was downlisted to Appendix II. Of these 132 shipments, 49 (37 percent) were reportedly imported into the United States and six (four percent) were shipments permitted for export from the United States (UNEP-WCMC 2010, unpaginated). With the information given in the UNEP-WCMC database, of the 132 shipments recorded between 1997 and 2009, approximately 17 shipments consisted of live wood bison: 13 shipments (165 individuals) of captive-born/captive-bred wood bison were traded for commercial, zoological, or captive-breeding purposes; two shipments of ranched wood bison (13 individuals) were traded for commercial purposes; and two shipments of wild wood bison (18 individuals) were traded for commercial and captive-breeding purposes. There has been no trade in live, wild wood bison reported since 2002. The other 115 shipments since 1997 involved trade in parts and products (15 trophies, 1,628 kg (3,589 lb) of meat, 9 carvings, 8 skulls and horns, 304 teeth, 17 skins, 629 scientific specimens, and 6 garments, leather products, and hair) of wild, captive-born/captive-bred, pre-Convention, and confiscated wood bison.

As a species listed in Appendix II of CITES, commercial trade of wood bison is allowed. However, CITES requires that before an export can occur, a determination must be made that the specimens were legally obtained (in accordance with national laws) and that the export will not be detrimental to the survival of the species in the wild. Because CITES requires that all international shipments of wood bison must be legally obtained and not detrimental to the survival of the species, we believe that international trade controlled via valid CITES permits is not a threat to the species. Furthermore, we have no information indicating that illegal trade is a threat to this species.

It is possible that, with the ongoing recovery actions, a status review of wood bison in Canada could lead to delisting under SARA within the next 10 years. If this were to happen, we expect that regulations for recreational hunting, import of wood bison trophies, and permitting would change. Our ability to predict how these changes would affect the status of the species is limited; consequently we can only reliably project for a short time into the future.

Because harvest rates of free-ranging wood bison are based on sustainability, harvest is closely monitored and regulated, scientific collecting is tightly controlled, commercial harvest does not occur in wild populations, and import and export are controlled via CITES permits, we have determined that overutilization for commercial, recreational, scientific, or educational purposes is not a threat to wood bison now or in the foreseeable future.

A decision in the early 1920s led to the transfer of 6,673 plains bison into WBNP, Alberta, Canada, where approximately 1,500 disease-free wood bison resided (FEAP 1990, p. 6; Gates et al. 1992, pp. 146-147). Although initially separated by fairly large distances, the plains bison eventually co-occurred and interbred with the wood bison and also transmitted bovine tuberculosis and brucellosis to them (FEAP 1990, p. 6; Gates et al. 1992, pp. 146-147). By the late 1940s and early 1950s, the population of wood bison in WBNP increased to between 12,500 and 15,000 animals (Fuller, 1950, p. 450). From that level, wood bison numbers began to decline from 11,000 in 1971 to approximately 2,300 by 1998 (Carbyn et al. 1998, p. 464). The reasons for the population decline are not known with certainty, but disease, predation by wolves, and habitat condition may all have played a role (Carbyn et al. 1998, pp. 467-468; Joly and Messier 2004, pp. 1165-1166). Population numbers at WBNP have stabilized at about 4,000 to 5,000 since 2002 (Table 1).

Bovine tuberculosis and bovine brucellosis receive special attention because they cause production losses in domestic animals, they can potentially infect humans, and they are required to be reported under the Canadian Food and Inspection Agency's (CFIA) Health of Animals Act and Regulations (FEAP 1990, p. 7). Although wildlife is not under their jurisdiction, the CFIA recognizes the threat of reportable diseases to the commercial livestock industry and international trade. The CFIA follows a strict testing and eradication program for bovine tuberculosis and brucellosis in domestic animals, requiring that all infected animals and all exposed susceptible animals be destroyed (Canadian Food Inspection Agency 2002, unpaginated). Consequently, there is great concern from the Canadian cattle industry, which is currently recognized as disease-free, that disease will spread from the wood bison to domestic cattle (GNT 2009, p. 13). The goal of the CFIA's National Bovine Tuberculosis/Brucellosis Eradication Program is to detect and eradicate tuberculosis and brucellosis in farmed animals in Canada in order to protect the health of food-producing and companion animals, safeguard human health, and safeguard the health of free-roaming wildlife. Canada recognizes an obligation to detect, identify, report, and contain important diseases in wildlife, especially those with the potential to impact biodiversity, human and livestock health, the environment, and the economy within and beyond their borders.

The wood bison in and around WBNP are a reservoir for bovine brucellosis and bovine tuberculosis. Because there is a risk that these diseases could spread to uninfected free-ranging bison herds or to commercial cattle and bison operations, limits are placed on herd expansion to minimize the chance that the diseased animals come into contact with either free-ranging, disease-free herds, or domestic cattle or bison operations. In addition, the diseased herds occupy suitable habitat that could be used for the establishment of disease-free herds of wood bison. Therefore, the existence of diseased bison herds in and around WBNP compromises further recovery of wood bison in northern Alberta, the Northwest Territories, and British Columbia (Gates et al. 2001, p. 29). The total area compromised by diseased herds is approximately 218,516 km 2 (84,369 mi 2 ) or about 12 percent of the original range of the wood bison in Canada (Gates et al. 2001, p. 24). As mentioned earlier there are no effective vaccines for the treatment of animals in free-ranging populations.

The disease-free herds most at risk from infection from animals at WBNP are the Mackenzie, Hay-Zama, and Nahanni. Regulated harvest is allowed from the Mackenzie herd, Nahanni herd, and the Hay-Zama herds under permit systems (as described under Factor B), in part to prevent overlap with the diseased herd. In addition, the Governments of the Northwest Territories, Alberta, and British Columbia have designated management zones to reduce the risk of dispersing animals transmitting disease to disease-free herds in their provinces. In 1987, the Government of the Northwest Territories implemented a program to reduce the risk of contact between infected bison in and around WBNP and disease-free bison in the Mackenzie and Nahanni herds by establishing a Bison Free Management Area (BFMA) (Nishi 2002, pp. 5-6). The BFMA (39,000 km 2 (15,058 mi 2 ) encompasses the area between the Alberta-Northwest Territories border and southern shoreline of the Mackenzie River. In 1992, the Government of the Northwest Territories established the Nuisance Bison Control Regulations under the Northwest Territories Wildlife Regulations Act, permitting eligible hunters to legally shoot any bison sighted in the BFMA. All bison within this area are presumed disease carriers. The objectives of the program are to detect and remove any bison, and to prevent establishment of herds in the management area (Nishi 2002, p. 6). No bison were observed in the area during annual aerial surveys in the period 1988-2006, but 13 bison were killed in the mid-1990s (Nishi 2002, pp. 12-13; Hartop et al. 2009, p. 41). Aerial surveillance occurs annually.

In 1995, the Government of Alberta established a 36,000 km 2 (13,900 mi 2 ) bison management area around the Hay-Zama herd to protect all bison from hunting. Within this area, all wood bison are legally protected under Alberta's Wildlife Act; outside of the area they are not protected and can be hunted. The area outside of the protected management area creates a large buffer zone between the disease-free Hay-Zama herd and the diseased herds within WBNP (Gates et al. 2001, p. 38).

Control areas and buffer zones between diseased and non-diseased populations may not prevent disease transmission (Canadian Food Inspection Agency 2002, unpaginated) because they are sporadically patrolled and imperfectly enforced. As discussed earlier, fences are an ineffective method to contain herds long term, especially those in large areas (FEAP 1990, p. 29). Consequently, a long-term, more sustainable solution is needed to address this problem.

A Federal Environmental Assessment Panel (FEAP) was assembled to evaluate four courses of action to address the diseased herds at WBNP. These actions were initially proposed by the Bison Disease Task Force: (1) Do nothing; (2) fence WBNP to contain the diseased bison and prevent the spread of disease; (3) use a combination of strategically placed fences, buffer zones exterior to the Park from which all bison would be eliminated, and institute land-use restrictions on cattle grazing; and (4) phased elimination of the diseased herd and replacement with disease-free wood bison (FEAP 1990, p. 15). After public hearings, and consultation with technical experts, the panel recommended eradication of the existing diseased bison population to eliminate the risk of transmission of disease from bison in and around WBNP to domestic cattle, wood bison, and humans (FEAP 1990, p. 2). Public response to this recommendation was largely negative (Carbyn et al. 1998, p. 464). The recommendation was not implemented; consequently, control of disease spread currently depends on the buffer zones.

Annual examinations and serological studies of bison harvested from the Mackenzie herd indicate that the herd continues to be disease free (Nishi 2002, p. 23). Over 220 samples from the Hay-Zama herd were received as a result of the hunts that could be tested for disease. All samples tested negative (Government of Canada 2010a, unpaginated). There is also no evidence of bovine brucellosis and bovine tuberculosis in reintroduced herds in the Yukon Territory, British Columbia, western Alberta, or Manitoba. Free-ranging, disease-free herds currently include approximately 4,414 wood bison (Table 1). Because of their distance from WBNP, the Aishihik and Chitek Lake herds are the most secure from disease.

Recovery and conservation efforts for wood bison emphasize the importance of preventing the spread of tuberculosis and brucellosis to disease-free populations, and eliminating diseases in infected populations (Gates et al. 2001, p. 30). The focus on disease prevention and control is consistent with the recovery goals of increasing the number of disease-free populations. Parks Canada, through Elk Island National Park, has worked with the recovery team and others to develop and maintain a disease-free captive-breeding herd, which has provided healthy stock for several restoration projects (Gates et al. 2001, p. 18).

Because the northern latitudes are experiencing the greatest changes in climate, this area may also be at the greatest risk for the emergence of diseases and parasites that may threaten the stability of wildlife populations (Kutz et al. 2004, pp. 109, 114). Warming may be of particular concern for wildlife in northern regions because the life-history patterns of most hosts and parasites are currently constrained by climatic conditions (Kutz et al. 2004, p. 114). Researchers have hypothesized that climate change will accelerate pathogen development rates, lead to greater overwinter survival of pathogens, and modify host susceptibility to infection in such a way that the effects of disease will increase (Ytrehus et al. 2008, p. 214). Wood bison are susceptible to many diseases and parasites (Reynolds et al. 2003, pp. 1030-1032). How climate change may affect the number of animals infected, the pathogen virulence, and, consequently, wood bison viability is unknown.

One potential effect of climate change may be an increase in anthrax outbreaks because of increased summer air temperatures. Between 1962 and 1993, nine anthrax outbreaks were recorded in northern Canada, killing at least 1,309 wood bison (Dragon et al. 1999, p. 209). Additional outbreaks continued to occur through at least 2007 (GNT 2009, p. 13). Wood bison appear most susceptible to outbreaks when they are stressed, including heat stress and high densities of biting insects (Dragon et al. 1999, p. 212; Gates et al. 2010, p. 28). In addition, if climate change leads to widespread or intense drought, there could be changes in the quality and availability of forage that may cause animals to concentrate around available food and water. These factors could contribute to stress levels and increase susceptibility to anthrax (Dragon et al. 1999, p. 212; Gates et al. 2010, p. 28). Although isolated anthrax outbreaks occur currently, it is possible that outbreaks may become more frequent, widespread, or affect a greater number of animals in the future. Thus far, anthrax outbreaks have occurred sporadically when the necessary factors have come together to affect portions of one herd at a time. Anthrax is not currently having a population-level effect, and we do not have enough information to predict with confidence if anthrax will have a population-level effect on wood bison in the future as a result of climate change.

Wolf predation can be a significant limiting factor for diseased populations of wood bison (Reynolds et al. 1978, p. 581; Van Camp 1987, p. 25). Wood bison were the principle food of two wolf packs from 1975 to 1977 in the Slave River lowlands (Van Camp 1987, pp. 29, 32). Of the adult and subadult wood bison that died in 1976-1977, wolves killed 31 percent; however, hunters killed 39.3 percent (Van Camp 1987, p. 33). Joly and Messier (2004, p. 1173) found that productivity of the diseased WBNP herd was insufficient to offset losses to both predation and disease, but that in the absence of either factor, positive population growth was possible. Presence of disease likely increased the killing success of wolves through bison debilitation (Joly and Messier 2004, p. 1174). Wood bison evolved with wolves and we have no data showing that predation by wolves is limiting the recovery of any of the disease-free herds or would cause the extirpation of a herd (ADF&G 2007, p. 98).

The presence of disease and diseased herds is recognized as a factor limiting recovery (Mitchell and Gates 2002, p. 12). The effectiveness of current management actions such as maintaining spatial separation between diseased and disease-free herds by limiting herd size is yet to be determined over long timeframes. Research is continuing on creation of disease-free herds. No effective vaccines exist for brucellosis, tuberculosis, or anthrax for free-ranging populations. In addition, although recommendations for the management of the diseased herds in and around WBNP have been suggested (FEAP 1990, p. 2) they have not yet been implemented, it is unknown if they will be implemented, or how implementation of the recommendations would affect the status of the subspecies.

Predation by wolves is a natural threat that will persist indefinitely into the future. Although diseased herds may be more susceptible to predation, healthy herds, which now represent approximately half of the free-ranging wood bison, are not. As long as wolves are present on the landscape, they will present an ongoing, low level of threat, especially to diseased herds.

The presence of disease in the largest potential donor population of wood bison (WBNP herd) has limited the number of animals available for establishing or augmenting herds throughout the wood bison's historical range and has removed otherwise optimal habitat from consideration for expansion of wild populations. The presence of reportable diseases will continue to lead to actions that impact conservation, in particular restriction of herd expansion and the reintroduction of herds in particular areas. Although brucellosis and tuberculosis may limit wood bison population growth and productivity in some herds, they are unlikely to cause extirpation of any population (Bradley and Wilmshurst 2005, p. 1204; Gates et al. 2010, p. 60), but when combined with predation herd size can be limited. Anthrax outbreaks occur sporadically when critical factors come together. Climate change could affect the frequency of outbreaks if increased temperatures or drought caused increased levels of stress in the animals, especially during the rut. Because disease constrains and inhibits full recovery of the species, until a solution for the diseased animals at WBNP is found, or effective vaccines are discovered and utilized, disease will continue to be a threat to wood bison now and in the foreseeable future.

The first protective legislation for wood bison, making it illegal for anyone to molest the species, was passed by the Canadian Government in 1877, but not until the law was enforced beginning in 1897 did the population increase (Soper 1941, pp. 362-363; Gates et al. 2001, p. 12).

As previously mentioned, the wood bison was recognized by the COSEWIC as an endangered subspecies of Canadian wildlife in 1978. It was reclassified to threatened in June 1988, based on a status report prepared by the National Wood Bison Recovery Team.

The Species at Risk Act (SARA), enacted on December 12, 2002, became fully effective on June 1, 2004, and is the Canadian counterpart to the U.S. Endangered Species Act. The purpose of SARA is to prevent listed wildlife species from becoming extinct or lost from the wild (extirpated); to help in the recovery of extirpated, endangered, or threatened species; and to ensure that species of special concern do not become endangered or threatened. SARA also requires the development of recovery strategies and action plans for covered species. In the SARA, the COSEWIC was established as the scientific body that identifies and assesses a species' status; however, the government makes the final decision on whether to list a species.

Species such as wood bison that were designated as threatened or endangered by the COSEWIC before SARA had to be reassessed before being included on the official list of wildlife species under SARA. The wood bison is currently listed as a threatened species under Schedule 1 of SARA. The National Recovery Plan for wood bison was published in 2001 (Gates et al. 2001) and is currently under revision. As discussed in the Recovery section above, many recovery actions have been implemented and more are in progress. As discussed under Factor B, SARA requires permits for all scientific collection of listed species.

The SARA covers all species on Federal lands such as national parks, national wildlife areas, Prairie Farm Rehabilitation Administration pastures, aboriginal reserve lands, and military training areas. It prohibits the killing, harming, harassing, or taking of extirpated, endangered, or threatened species, and the destruction of their residences ( e.g., nest or den) on Federal lands, except where permitted under a national recovery strategy (GNT 2009, p. 15). Because the recovery strategy includes managing herd size for the health of the habitat and herds (Gates et al. 2001, pp. 35-39), bison hunting is allowed under a quota system in the Nahanni, Mackenzie, and Aishihik herds (described under Factor B). The Northwest Territories Big Game Hunting Regulations consider bison in the Slave River Lowlands to be hybrids, which General Hunting License holders may hunt without limit or closed season. In the Yukon, the Aishihik herd size is managed through hunting. In Alberta, Hay-Zama herd size is managed by hunting to reduce the likelihood that the herd will come into contact with animals from WBNP (GNT 2009, p. 15).

Habitat protection within the range of the Mackenzie bison herd is facilitated through the SARA and the Mackenzie Valley Resource Management Act of 1998. Although the Mackenzie Valley Resource Management Act does not specifically provide protection to wood bison, it did create a Land and Water Board (LWB), which is given the power to regulate the use of land and water, including the issuance of land use permits and water licenses. The LWB's Environmental Impact Review Board is the main instrument in the Mackenzie Valley for the examination of the environmental impact of proposed developments. The LWB's Land Use Planning Board is given the power to develop land use plans and to ensure that future use of lands is carried out in conformity with those plans.

As described below, several wood bison herds occur wholly or partially in National Parks, ecological reserves, or Provincial Parks (Table 2). In 1922, WBNP was established in Alberta and the Northwest Territories for the protection of wood bison. Habitat protection of 44,807 km 2 (17,300 mi 2 ) within WBNP occurs through the Canada National Parks Act, the purpose of which is to maintain or restore the ecological integrity of parks, through the protection of natural resources and natural processes. With respect to a park, ecological integrity means a condition characteristic of its natural region, including abiotic (nonliving) components and the composition and abundance of native species and biological communities. Renewable harvest activities can be regulated or prohibited, and is enforced through this legislation (Canada National Parks Act, 2000). National parks are protected by Federal legislation from all forms of extractive resource use such as mining, forestry, agriculture, and sport hunting. Only activities consistent with the protection of park resources are allowed. Efforts are directed at maintaining the physical environment in as natural a state as possible. Sport hunting is prohibited; however, traditional subsistence-level harvesting by First Nations is allowed in some areas as long as the resources are conserved (The Canadian Encyclopedia 2010a, unpaginated).

Ecological reserves are established in part for the protection of rare and endangered plants and animals in their natural habitat; preservation of unique, rare, or outstanding botanical, zoological, or geological phenomena; and perpetuation of important genetic resources. Research and educational functions are the primary uses for ecological reserves, but are open to the public for non-consumptive, observational uses. Plans are developed by the Ministry of Environment to provide protection and management to ensure long-term maintenance. Resource use, such as tree cutting, hunting, fishing, mining, domestic grazing, camping, lighting of fires and removal of materials, plants or animals, and the use of motorized vehicles are prohibited (British Columbia 2010, unpaginated).

Although there are numerous parks and ecological reserves throughout the range of the wood bison, these areas do not necessarily encompass all of the individuals of a herd. Individuals frequently move into and out of these areas; therefore, wood bison herds are only afforded protection while within the boundaries of the park or ecological reserve.

The Federal Environmental Assessment and Review Process (EARP) was introduced in Canada in 1973. In 1995, the Canadian Environmental Assessment Act replaced EARP and strengthened the Environmental Impact Assessment (EIA). The Canadian Environmental Assessment Act outlines responsibilities and procedures for the EIA of projects for which the Federal Government holds decisionmaking authority. The purposes of EIAs are to minimize or avoid adverse environmental effects before they occur and incorporate environmental factors into decisionmaking. All projects in National Parks must have an EIA. An EIA is also required under the law of the provinces and territories. Municipalities and corporations are subject to the EIA requirements of their respective provincial, territorial, or land claim jurisdictions, and are also subject to the Canadian Environmental Assessment Act if the Federal Government holds some decisionmaking authority concerning the proposed development or the acceptability of its impacts. This legislation ensures that any projects conducted on Federal lands, including National Parks, are carefully reviewed before Federal authorities take action so that projects do not cause significant adverse environmental effects, including areas surrounding the project. It encourages Federal authorities to take actions that promote sustainable development (Canadian Environmental Assessment Agency 2010, unpaginated). If a project is likely to cause significant adverse environmental effects that cannot be justified in the circumstances, even after taking into account appropriate mitigation measures the project shall not be carried out in whole or in part (Canadian Environmental Assessment Act (20)(b) and (37)(b)).

The wood bison is listed on Appendix II of CITES. CITES, an international treaty among 175 nations, including Canada and the United States, became effective in 1975. In the United States, CITES is implemented through the U.S. Endangered Species Act. The Secretary of the Interior has delegated the Department of the Interior's responsibility for CITES to the Director of the Service and established the CITES Scientific and Management Authorities to implement the treaty.

CITES provides varying degrees of protection to more than 32,000 species of animals and plants that are traded as whole specimens, parts, or products. Under this treaty, member countries work together to ensure that international trade in animal and plant species is not detrimental to the survival of wild populations by regulating the import, export, and reexport of CITES-listed animal and plant species (USFWS 2010, unpaginated). Under CITES, a species is listed on an Appendix and receives varying levels of regulation in international trade through permit and certification requirements depending upon the particular Appendix in which the species is listed (CITES 2010b, unpaginated). CITES Appendix-II species are not necessarily considered to be threatened with extinction now but may become so unless trade in the species is regulated. Appendix II allows for regulated trade, including commercial trade, as long as the exporting country issues a CITES permit based on findings that the specimen was legally acquired and the export will not be detrimental to the survival of the species. As discussed under Factor B, we do not consider international trade to be a threat impacting the wood bison. Therefore, protection under this treaty is an adequate regulatory mechanism.

Provincial and territorial governments within Canada can use the Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act (WAPPRIITA) to control transport of wood bison across their borders. This law applies to wood bison because it is on the CITES control list. The WAPPRIITA prohibits the import, export, and interprovincial transportation of CITES-listed species or any Canadian species whose capture, possession, and transportation are regulated by provincial or territorial laws, unless the specimens are accompanied by the appropriate documents (licenses, permits). In all cases, the WAPPRIITA applies to the animal, alive or dead, as well as to its parts and any derived products (Environment Canada 2010, p. 1).

In addition to national-level legislation that provides protection to wood bison, there is also protection at the provincial level. Alberta, the Northwest Territories, British Columbia, Manitoba, and the Yukon Territory classify wood bison as wildlife, which is the property of the provincial or territorial government. In 1995, the Government of Alberta established a Wildlife Management Area to protect the Hay-Zama herd and listed the wood bison as endangered within the protected area under the Alberta Wildlife Act (Gates et al. 2010, p. 71). In this area, all wood bison are legally protected from hunting; outside of the area they are not protected.

The Northwest Territories Wildlife Act enables the Minister of the Department of Resources, Wildlife, and Economic Development to prohibit the importation of any wildlife into the Northwest Territories without a permit. This prohibits uncontrolled importation of plains bison. In May 1964, wood bison were declared in danger of becoming extinct under the Northwest Territories Act and are now designated as a protected species in the Northwest Territories. As such, sport hunting and subsistence hunting by aboriginal people may occur, but is regulated.

Wood bison are on British Columbia's Red List of species and subspecies that are candidates for legal designation as endangered or threatened under the Wildlife Act (Harper 2002, p. 3). Wood bison are an endangered species under the Yukon Act and a “specially protected species” under the Wildlife Act (Yukon legislation) and are listed as protected under Manitoba's Wildlife Act. Bison are considered domestic when held in captivity under permit or license for game farming purposes. If a wood bison escapes captivity, the provincial or territorial government acquires ownership of the animal and it, therefore, becomes protected (Harper and Gates 2000, p. 919).

In the United States, as an endangered species under the Act, pure wood bison can be imported only by permit for scientific research or enhancement of propagation or survival of the species. Wood/plains bison hybrids, however, are not protected by the Act and can be imported if the required CITES Foreign Export Permits are obtained from Canada prior to the import. If the wood bison is reclassified to threatened, import of trophies legally taken and properly permitted under the Act could also occur. Because of the regulations in place in Canada for all hunts and the permits required for import/export under CITES, we do not anticipate that reclassification would cause any increase in the number of animals killed or have any effect on the herds that are hunted.

In addition to the protection of CITES and the Endangered Species Act, the import of live wood bison and trophies is also regulated by the U.S. Department of Agriculture (USDA), Animal and Plant Health Inspection Service (APHIS), Veterinary Services for health purposes (APHIS 2007, entire). Imported wood bison must be accompanied by a health certificate that certifies, among other things, that the animal is free of any evidence of communicable disease, was not in quarantine in Canada, is from a brucellosis-free province or territory, and has continuously resided in a tuberculosis accredited-free province.

Although there is tight control over the transmission of disease across the Canadian border, control of disease within Canada is more challenging. As explained above (Factor C), there is a program to detect and eradicate tuberculosis and brucellosis in farmed animals in Canada in order to protect the health of food-producing and companion animals, safeguard human health, and safeguard the health of free-roaming wildlife. In addition, buffer zones in which dispersing animals may be harvested have been created around the diseased herds to reduce the risk of bovine tuberculosis and brucellosis infection of the Mackenzie and Nahanni herds, which are most at risk from infection from animals at WBNP. In addition, the Governments of the Northwest Territories, Alberta, and British Columbia have designated management zones to reduce the risk of dispersing animals transmitting disease to disease-free herds in their provinces. However, as noted above, buffer zones are not ideal for preventing the spread of disease because they are sporadically patrolled and imperfectly enforced. Existing regulations and policies address the transmission of disease within Canada, but it is impossible to regulate the movement of wild animals across a large, mostly uninhabited landscape. Thus, we conclude that regulatory mechanisms are in place to minimize the spread of disease but because of the difficulty in containing herds of wild animals, the mechanisms are inadequate to prevent the spread of disease.

Under Factor E, we conclude that loss of genetic integrity through hybridization is a threat to wood bison. Preventing hybridization between plains bison and free-roaming wood bison is a goal of the recovery plan and is important to the conservation of the subspecies (Gates et al. 2001, p. 33). There is one free-ranging plains bison herd in Canada, in British Columbia, which was established as a result of the plains bison escaping from their enclosure. Preventing interbreeding between free-ranging plains bison and wood bison is a management objective in British Columbia and is accomplished by maintaining a large physical separation between the herds and having a management zone around the plains bison herd that allows harvest of plains bison within this zone (Harper et al. 2000, p. 23).

As discussed earlier under Factor A, plains bison presence on the landscape is increasing and commercial plains bison operations in Canada are expanding. The presence of plains bison within the historical range of wood bison increases the probability that wood bison will come into contact with them. Ranchers are most likely highly motivated by economics to prevent the escape of their animals and to recapture them if they do escape. It is unlikely that additional government regulations would improve on this basic incentive; therefore, although there may not be specific regulations regarding how plains bison should be contained, such regulations are not viewed as necessary or effectual. As mentioned above, buffer zones are not ideal for preventing the movement of free-ranging bison. Thus, although regulations are in place by which the Pink Mountain plains bison herd (a free-ranging herd) can be managed, and there is no indication that they have not been effective, they may not be 100 percent effective in preventing hybridization in the future because of the difficulty of managing wild animals over large areas of forested landscape.

The wood bison is currently protected through a variety of regulatory mechanisms, and we anticipate those protections to continue. The wood bison is protected by Canadian Federal, provincial, and territorial law. Internationally, its trade is regulated by CITES. International trade is limited to animals surplus to recovery needs in Canada, as determined under guidance of the National Wood Bison Recovery Team. In the United States, activities involving wood bison are regulated by the Endangered Species Act, and with reclassification, they will continue to be regulated. Federal agencies will need to consult with the Service on activities that may affect the species, and Federal permits will be required for scientific collection or any other form of take.

Disease and hybridization have been identified as threats to wood bison. Although buffer zones have been established and regulations implemented for the management of the buffer zones to minimize the potential of disease spread and hybridization, buffer zones have limitations and are an imperfect means by which to prevent animal movement. Therefore, we conclude that existing regulatory mechanisms are inadequate to completely protect wood bison from these threats.

Because bison follow linear landmarks and prefer open areas, vehicles on roads and other linear developments, such as railroad lines, present a hazard to wood bison. Collisions with vehicles are the largest source of known mortality for individuals in the Hay-Zama herd (Mitchell and Gates 2002, p. 9). For the Nordquist herd, vehicle collisions are a significant mortality factor (Wildlife Collision Prevention Program. 2010, pp. 22-23). The herd was established in the Nordquist Flats area, near the Liard River in northeastern British Columbia; however, individuals, and then the majority of the herd, moved to the Alaska Highway corridor. In January 2007, a limited aerial survey counted 97 wood bison, all of which were on the highway right-of-way, except for four bulls, which were observed within 500 m (1,640 ft) of the road (Reynolds et al. 2009, p. 6). Three of 15 wood bison introduced to the Etthithun Lake area in 1996 were killed in collisions with industrial road traffic during the first winter (Harper and Gates 2000, p. 921). The Yukon government has a “bison-free” policy in the vicinity of the Alaska Highway that includes deterrence, capture, and ultimately the destruction of problem animals (Yukon Fish and Wildlife Co-management undated, p. 1). During the growth phase of the Aishihik herd from 1988 to 1993, 49 wood bison were removed from the Alaska Highway right-of-way because of vehicle collisions and problem wildlife complaints (Boyd 2003, p. 187). Of these, 36 were captured and moved to a game farm, 8 were killed in collisions, and 5 were intentionally killed (Wildlife Collision Prevention Program 2010, unpaginated). From 1989 to 2007, collisions with vehicles killed from 1 to 30 wood bison annually from three herds combined in the Northwest Territories; fewer than 10 were killed annually in 11 of the 18 years (GNT 2009, p. 17; Wildlife Collision Prevention Program 2010, unpaginated).

Because of continued or increased resource development, tourism, and off-road vehicle use, it is anticipated that mortality from collisions with vehicles will be a source of individual mortality for several populations. Because mortality from road collisions represents a small portion of the total subspecies population, and efforts are made to reduce bison/highway conflicts, this source of mortality is not expected to have a significant impact at the subspecies population level.

Spring flooding in the Peace-Athabasca River Delta in 1958, 1961, and 1974 killed approximately 500, 1,100, and 3,000 wood bison, respectively (Reynolds et al. 2003, p. 1029). Autumn flooding in the same area in 1959 killed an estimated 3,000 (Reynolds et al. 2003, p. 1029). This region is within WBNP where the diseased herds reside. Most likely a small number of animals drown each year when caught by floods or when they break through ice (Soper 1941, p. 403). Large drowning events have not been documented from other rivers, and no large mortality events have been documented in recent years. Drowning is also recognized as a cause of mortality in the Chitek Lake herd. Because mortality due to drowning typically affects only a portion of a herd and herd sizes are increasing (Table 1), drowning does not appear to be having a population-level effect on wood bison.

Although wood bison are hardy and very cold tolerant (Gates et al. 2010, p. 24), above-average snowfall, long periods of sub-zero temperatures, and midwinter thaws followed by freezing can cause mortality. Such severe winter conditions reduce forage availability (Reynolds et al. 2003, p. 1030). Rain on snow events can also form an ice layer that creates a barrier to forage for herbivores (Putkonen 2009, p. 221). Freezing rain in autumn that causes ground-fast ice to form before snow cover accumulates, ice layering in the snow cover, crusting of the snow, and the formation of ground-fast ice in spring increase the energy required to obtain forage or make forage unobtainable (Gunn and Dragon 2002, p. 58). Soper (1941, pp. 403-404) recounts several stories in which excessive snowfall caused mass mortalities of wood bison, and Van Camp and Calef (1987, p. 23) report that 33 percent of the diseased wood bison herd in the Slave River lowlands was lost during the severe winter of 1974-1975. Starvation in bad winters is recognized as a source of mortality for wood bison in the Chitek Lake herd. We have no information indicating that starvation is having a population-level effect on any of the herds currently.

Rain on snow events may likely increase in the face of climate change (Rennert et al. 2009, p. 2312). A doubling of carbon dioxide is estimated to cause a 40 percent increase in the area impacted by rain on snow events in the Arctic by 2080 (Rennert et al. 2009, p. 2312). Rain on snow events may become more prevalent primarily in northwestern Canada, Alaska, and eastern Russia (Rennert et al. 2009, p. 2312). We have no reports that rain on snow events have led to the deaths of bison, but they could be susceptible to starvation by such events.

Genetic diversity in wood bison has been reduced through the large historic reduction in overall population size and the starting of new populations with very few individuals (founder effect). Genetic diversity is the primary means by which organisms can adapt to changing environmental conditions over time. Low levels of genetic diversity can reduce the ability of a population to respond to environmental changes. Current wood bison herds were established from relatively few founders (Wilson and Strobeck 1999, pp. 484-486). For example, the Elk Island National Park herd was started from 11 individuals, and the Mackenzie herd was started from 16 (Gates et al. 1992, p. 150; Wilson and Strobeck 1999, p. 494). Inbreeding, the mating of related individuals, can lead to lower fecundity, abnormalities, reduced growth rates, and other issues. Although inbreeding is more likely to occur in small herds or in herds that are isolated, it has not been documented in wood bison. Starting new populations with multiple groups of animals is one way to avoid or minimize the founder effect as was done in the establishment of the Aishihik herd. Moving disease-free animals from one herd to another is another method to maintain genetic diversity. One of the wood bison recovery goals is to ensure that the genetic integrity of wood bison is maintained. Because no effects of inbreeding have been documented and management actions have been shown to be effective, we conclude that loss of genetic diversity is not a threat to wood bison now or in the foreseeable future.

Hybridization occurs when individuals from genetically distinct groups such as wood bison and plains bison interbreed. The introduction of plains bison to WBNP in the 1920s put the two distinct subspecies in contact with each other and threatened the genetic purity of wood bison (Gates et al. 2010, p. 17). The discovery of an isolated subpopulation of wood bison in 1957, and subsequent translocation of individuals, created the Mackenzie and Elk Island National Park herds, which were thought to be pure wood bison. Genetic analysis has indicated that these bison did have limited contact with plains bison, but it was minimal enough that the animals exhibit predominantly wood bison traits and wood bison herds originating from these founders are genetically more similar to one another than they are to plains bison (van Zyll de Jong et al. 1995, pp. 401-404; Wilson and Strobeck 1999, p. 493). Although recovery actions emphasize maintaining the genetic integrity of wood bison ( i.e., recovery goal number 3) (Gates et al. 2001, p. 33), as discussed earlier under Factor A, plains bison presence on the landscape is increasing. Commercial plains bison operations in Canada are expanding, and the Pink Mountain plains bison herd was established in British Columbia as a result of plains bison escaping from an enclosure. The commercial plains bison operations and plains bison herds remove potential habitat for wood bison, and the presence of plains bison within the historical range of wood bison increases the probability that wood bison will come into contact with them. For these reasons, loss of genetic integrity through hybridization is a threat to wood bison and will remain so in the foreseeable future.

Accidental mortality typically occurs randomly and cannot be predicted. We expect accidents to continue at the same rate and scale as they have in the past, into the future, but only expect this to effect individuals and not be significant enough to affect the species as a whole. Relative to genetic diversity, inbreeding in wood bison has not been documented, and management actions are in place to prevent further loss of genetic diversity. The status of genetic issues relating to hybridization could change relatively rapidly, especially if plains bison were to escape from captivity in close proximity to a wood bison herd. Currently, free-ranging wood bison and plains bison herds are widely separated from one another, but as herd size grows, the separation shrinks, increasing the odds that they may come into contact with one another. Furthermore, bison are difficult animals to contain, they can travel long distances, and the wood and plains bison can readily interbreed.

In summary, accidental mortality will continue to occur regularly, primarily through collisions with vehicles and drowning. In addition, climate change may create localized weather conditions such as above-average snowfall, long periods of sub-zero temperatures, or ground-fast ice formation that can lead to winter mortality of portions of herds. Given the number of herds and their wide distribution across the landscape, we conclude that accidental mortality and starvation are not threats to wood bison now or in the foreseeable future. It is recognized that genetic diversity in wood bison is relatively low, and that the herds must be managed to maintain genetic diversity. Loss of genetic diversity is a factor that may limit the ability of wood bison to adapt to changing conditions in the future, but the magnitude of that limitation, if it exists, is unknown. Lack of genetic diversity is potentially limiting over the long term depending on the magnitude of environmental change wood bison may face. Because no effects of inbreeding have been documented and management actions have been shown to be effective, we conclude that loss of genetic diversity is not a threat to wood bison now or in the foreseeable future. Hybridization with plains bison is a threat that most likely will increase in the future. Because of consumer demand for bison meat we expect commercial bison production will continue to expand, removing suitable habitat for wood bison recovery herds, and increasing the probability that escaped plains bison will be free on the landscape. Hybridization is a threat to wood bison now and in the foreseeable future.

As required by the Act, we considered the five factors in assessing whether the wood bison is threatened or endangered throughout all or a significant portion of its range. We reviewed the petition, information available in our files, comments and information received after the publication of our 90-day finding (74 FR 5908), and other available published and unpublished information, and consulted with recognized experts. We have carefully assessed the best available scientific and commercial data regarding the past, present, and future threats faced by wood bison. This status review found that threats to wood bison are still present in factors A, C, D, and E. Habitat loss has occurred from agricultural development, and we expect losses will continue in concert with human growth and expansion of agriculture, including commercial bison production. The presence of bovine brucellosis and bovine tuberculosis constrains herd growth as managers attempt to maintain physical separation between diseased and disease-free wood bison and cattle herds, the diseased herds are occupying habitat that could be restored with disease-free herds, and disease in the largest potential donor population (WBNP herd) prevents those animals from being used in reintroduction projects. Plains bison are commercially produced in historical wood bison habitat. These operations remove potential habitat from wood bison recovery efforts and the escape of plains bison poses a threat to wood bison because of hybridization and the loss of genetic integrity. Finally, we found that regulatory mechanisms are inadequate to prevent disease transmission within Canada, and to prevent hybridization.

In addition to the five factor analysis, we also considered the progress towards meeting the recovery goals outlined in the Canadian recovery plan to determine if it is appropriate to reclassify the wood bison under the Act. We took into consideration the conservation actions that have occurred, are ongoing, and are planned. Since listing, the subspecies' status has improved as a result of the following:

• Enactment and enforcement of national and international laws and treaties have minimized the impacts of hunting and trade.

• Reintroduction of disease-free herds has increased the number of free-ranging herds from 1 population of 300 in 1978 to 7 populations totaling 4,414 bison in 2008.

• Diseased and disease-free, free-ranging populations are stable or increasing.

In sum, the continued reintroduction of disease-free herds, the ongoing development and updating of management plans, the active management of herds, the ongoing research, and the protections provided by laws and protected lands provide compelling evidence that recovery actions have been successful at reducing the threats posed to the species.

The primary factor that led to the listing of the wood bison was the small number of free-ranging, disease-free animals on the landscape. However, the trend today is towards increasing numbers of disease-free herds and population sizes. We find that the threats identified under factors A, C, D, and E, when combined with the increase in number of herds and population sizes, ongoing active management, and protections provided by laws, are not of sufficient imminence, intensity, or magnitude to indicate that the wood bison is presently in danger of extinction and is, therefore, not endangered. However, threats to wood bison still exist and will continue into the foreseeable future. Consequently, we have determined that wood bison should be reclassified from endangered to threatened.

We next consider whether a distinct vertebrate population segment (DPS) exists or whether any significant portion of the wood bison range meets the definition of endangered.

Under the Service's “Policy Regarding the Recognition of Distinct Vertebrate Population Segments Under the Endangered Species Act” (61 FR 4722, February 7, 1996), three elements are considered in the decision concerning the establishment and classification of a possible DPS. These elements, which are applied similarly for additions to or removal from the Federal List of Endangered and Threatened Wildlife, include:

(1) The discreteness of a population in relation to the remainder of the species to which it belongs;

(2) The significance of the population segment to the species to which it belongs; and

(3) The population segment's conservation status in relation to the Act's standards for listing, delisting, or reclassification ( i.e., is the population segment endangered or threatened).

Under the DPS policy, a population segment of a vertebrate taxon may be considered discrete if it satisfies either one of the following conditions:

(1) It is markedly separated from other populations of the same taxon as a consequence of physical, physiological, ecological, or behavioral factors. Quantitative measures of genetic or morphological discontinuity may provide evidence of this separation.

(2) It is delimited by international governmental boundaries within which differences in control of exploitation, management of habitat, conservation status, or regulatory mechanisms exist that are significant in light of section 4(a)(1)(D) of the Act.

Free-ranging wood bison herds do not cross international boundaries; no herds are discrete based on this criterion. There is marked geographic separation of the Aishihik and Chitek Lake herds from those centered more closely around WBNP, and there is no possibility of gene exchange between the Aishihik and Chitek Lake herds and those near WBNP. Because all extant wood bison herds originated from the same founders, there is no reason to maintain genetic distinctness among the herds. One of the recovery goals is to “ensure that the genetic integrity of wood bison is maintained.” Because this goal can be accomplished through the movement of relatively few animals among the herds, it is reasonable to expect that this is a strategy that may be employed in the future to maintain genetic integrity. However, to our knowledge this strategy has not been used; therefore, because of marked geographical separation, the Aishihik and Chitek Lake herds are determined to be discrete.

Under our DPS Policy, in addition to our consideration that a population segment is discrete, we consider its biological and ecological significance to the taxon to which it belongs. This consideration may include, but is not limited to: (1) Evidence of the persistence of the discrete population segment in an ecological setting that is unique or unusual for the taxon; (2) evidence that loss of the population segment would result in a significant gap in the range of the taxon; (3) evidence that the population segment represents the only surviving natural occurrence of a taxon that may be more abundant elsewhere as an introduced population outside its historical range; and (4) evidence that the discrete population segment differs markedly from other populations of the species in its genetic characteristics (61 FR 4721; February 7, 1996).

None of the wood bison herds occur in unique or unusual ecological settings; they are either in typical historical habitat or have been established in habitat that mimics historical habitat (Chitek Lake herd). Wood bison herds are currently in a growth phase and are beginning to fill in gaps in what was once a much more extensive range. There are already significant gaps in its distribution compared to the historical condition, and no one herd is more important than another in this regard. In the unlikely event of a herd being extirpated, it could be replaced through management actions that have been refined and implemented over the last 20 years. Six of the seven free-ranging, disease-free herds are within the historical range of the species. Only the Chitek Lake population is outside of what is considered the historical range. All of the herds, except the Mackenzie herd, were started with animals from Elk Island National Park, and both the Mackenzie and Elk Island National Park herds were initiated from animals from WBNP.

Because of the founder effect (a small number of founders which represented only a portion of the genetic variability available) and genetic drift, there are currently distinct, but low, genetic differences among the herds (Wilson and Strobeck 1999, p. 493). Wilson and Strobeck (1999, p. 494) note the power of the founder effect to lead to genetically distinct populations even when the populations were started at about the same time with animals taken from the same locale. The low level of genetic differences among the herds is an artifact of management actions and the differences do not represent significant, unique or special genetic traits. Therefore, although the Chitek and Aishihik herds are discrete, we find that they are not significant and no herds qualify as a DPS.

Having determined that the wood bison does not meet the definition of an endangered species throughout its range, we must next consider whether there is a significant portion of the range where the wood bison is in danger of extinction. A portion of a species' range is significant if it is part of the current range of the species and is important to the conservation of the species because it contributes meaningfully to the representation, resiliency, or redundancy of the species. The contribution must be at a level such that its loss would result in a decrease in the ability to conserve the species.

We evaluated the wood bison's range in the context of whether any potential threats are concentrated in a significant portion of the range such that if there were concentrated impacts, those wood bison populations might be in danger of extinction.

The herds in and around WBNP, which represent approximately half of the free-ranging wood bison, have tested positive for bovine brucellosis and/or tuberculosis. Approximately 30 percent of the wood bison in this area test positive for brucellosis, 21 to 49 percent test positive for tuberculosis, with a combined prevalence of 42 percent (Tessaro et al. 1990, p. 174; Gates et al. 2010, p. 35). It could be argued that the threat of disease to these populations is concentrated. However, as discussed above, these diseases are chronic and cause slow debilitation, not acute mortality of large numbers of animals at one time. The population at WBNP has persisted with these diseases since the 1920s, and population numbers have been stable at 4,000 to 5,000 since 2002 (Table 1).

Research into solutions on how to manage the diseased herds in and around WBNP continues. In 2005, a technical workshop was convened to determine in part if it was technically possible to remove disease from the wood bison herds in and around WBNP (Shury et al. 2006). Technical success was defined as reestablishing a disease-free bison population at a similar level to the current population without any loss in genetic diversity. The team determined that:

1. Eradication of bovine tuberculosis and brucellosis through lethal removal and reintroduction is technically feasible, and under controlled conditions there would be a very high probability of eradicating both diseases.

2. The eradication of these diseases would be a long-term project, taking 15-20 years.

3. The cost was estimated to be between 62 and 78 million dollars over 20 years with the greatest costs being incurred during the first 4 years (Shury et al. 2005, pp. 1-2).

Although the diseases affect the fitness of the herds and cause occasional mortalities, they will not cause herd extirpation. We are not aware of any other threat within this area that would act synergistically with disease and heighten our level of concern for these herds. Consequently, although we recognize that it is desirable to eradicate these diseases, we conclude that the threat they present is not of a magnitude that leads us to delineate the herds in and around WBNP as being more in danger of extinction than the other herds, and, as being a significant portion of the wood bison range.

In summary, the primary threats to the wood bison are relatively uniform throughout the species' range. We have determined that none of the existing or potential threats currently place wood bison in danger of extinction throughout all or a significant portion of its range.

Conservation measures provided to species listed as endangered or threatened under the Act include recognition, requirements for Federal protection, and prohibitions against certain practices. Recognition through listing results in public awareness, and encourages and results in conservation actions by Federal governments, 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 within the United States or on the high seas with respect to any species that is proposed or listed as endangered or threatened, and with respect to its critical habitat, if any is being designated. However, given that there are no wild populations of wood bison in the United States, critical habitat is not being designated for this species under section 4 of the Act.

Section 8(a) of the Act authorizes 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 and threatened 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.

The Act and its implementing regulations set forth a series of general prohibitions and exceptions that apply to all endangered and threatened wildlife. As such, these prohibitions would be applicable to the wood bison. These prohibitions, under 50 CFR 17.21 (17.31 for threatened wildlife species), make it illegal for any person subject to the jurisdiction of the United States to “take” (take includes harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, collect, or to attempt any of these) within the United States or upon the high seas, import or export, deliver, receive, carry, transport, or ship in interstate or foreign commerce in the course of a commercial activity, or to sell or offer for sale in interstate or foreign commerce, any endangered wildlife species. It also is illegal to possess, sell, deliver, carry, transport, or ship any such wildlife that has been taken in violation of the Act. Certain exceptions apply to agents of the Service and State conservation agencies.

We may issue permits to carry out otherwise prohibited activities involving endangered and threatened wildlife species under certain circumstances. Regulations governing permits are codified at 50 CFR 17.22 for endangered species, and at § 17.32 for threatened species. With regard to endangered wildlife, a permit must be issued for the following purposes: For scientific purposes, to enhance the propagation or survival of the species, and for incidental take in connection with otherwise lawful activities. For threatened species, a permit may be issued for the same activities, as well as zoological exhibition, education, and special purposes consistent with the Act.

If made final, this rule would revise 50 CFR 17.11(h) to reclassify the wood bison from endangered to threatened. The prohibitions and conservation measures provided by the Act, particularly through sections 4(d) and 9 would still apply to this species. Because there are no wild populations of wood bison in the United States, no critical habitat was designated, and consequently none will be affected. We are also correcting the 1980 listing to include Alaska in the historical range based on the best available scientific information (Skinner and Kaisen 1947, p. 158; Stephenson et al. 2001, p. 140; Rasic and Matheus 2007, p. 385). In addition, because the 1980 CFR indicated that the listed entity for wood bison was a DPS, we are correcting that mistake. Despite the 1980 designation, it is clear that the wood bison is listed at the subspecies level. The CFR through 1980 indicated the Service's intent of the original listing; because we have conducted no rulemaking since that time, we are making the correction here to change the scope of the listed entity. The entire “population” of wood bison in Canada is the full extent of the subspecies' current range and no individuals occur in the wild outside this population.

Under our peer review policy (59 FR 34270; July 1, 1994), we will solicit the expert opinions of three appropriate and independent specialists regarding pertinent scientific or commercial data and assumptions relating to the taxonomy, population models, and supportive biological and ecological information on this proposed rule. The purpose of such review is to ensure that we base listing decisions on scientifically sound data, assumptions, and analysis. To that end, we will send copies of this proposed rule to these peer reviewers immediately following publication in the Federal Register .

We have determined that we do not need to prepare an Environmental Assessment or Environmental Impact Statement, as defined under the authority of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ), in connection with regulations adopted pursuant to section 4(a) of the Endangered Species Act. We published a notice outlining our reasons for this determination in the Federal Register on October 25, 1983 (48 FR 49244).

A complete list of the references cited may be obtained from the Alaska Regional Office ( see FOR FURTHER INFORMATION CONTACT ).

The primary author of this rule is Marilyn Myers, Ph.D., Ecological Services, Alaska Regional Office, 1011 E. Tudor Road, Anchorage, Alaska, 99503, (907) 786-3559.

We propose to amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below:

On December 10, 2010 (75 FR 77476), we published a proposed rule to list the Arctic, Okhotsk, Baltic, and Ladoga subspecies of the ringed seal as threatened under the ESA. Based on the status of these subspecies, we also proposed protective regulations pursuant to section 4(d) of the ESA for these subspecies to include all of the prohibitions in section 9(a)(1) of the ESA.

We received requests to extend the public comment period on the proposed rule due to partial overlap of the comment period with the holiday season, and also because the comment period is scheduled concurrently with the comment period for the proposed listing of the Beringia and Okhotsk Distinct Population Segments (DPSs) of the bearded seal ( Erignathus barbatus ) (75 FR 77496). Three requesters asked for an additional 30 days; and one requester asked for an additional 60 days. We have considered these requests and conclude that a 45-day extension should allow sufficient time for responders to submit comments without significantly delaying this rulemaking process. We are therefore extending the public comment period, which was scheduled to end February 8, 2011, to March 25, 2011, to allow additional time for public comment. A 45-day extension of the public comment period on the proposed rule to list DPSs of the bearded seal is published concurrently as a separate notice.

On December 10, 2010 (75 FR 77496), we published a proposed rule to list the Beringia and Okhotsk DPSs of the bearded seal as threatened under the ESA. Based on the status of these DPSs, we also proposed protective regulations pursuant to section 4(d) of the ESA for these DPSs to include all of the prohibitions in section 9(a)(1) of the ESA.

We received requests to extend the public comment period on the proposed rule due to partial overlap of the comment period with the holiday season, and also because the comment period is scheduled concurrently with the comment period for the proposed listing of subspecies of the ringed seal ( Phoca hispida ) (75 FR 77476). Three requesters asked for an additional 30 days; and one requester asked for an additional 60 days. We have considered these requests and conclude that a 45-day extension should allow sufficient time for responders to submit comments without significantly delaying this rulemaking process. We are therefore extending the public comment period, which was scheduled to end February 8, 2011, to March 25, 2011, to allow additional time for public comment. A 45-day extension of the public comment period on the proposed rule to list subspecies of the ringed seal is published concurrently as a separate notice.