The Potato Research and Promotion Act of 1971, as amended, (7 U.S.C. 2611 et seq. ) authorized the Potato Research and Promotion Plan which is industry operated and funded, with oversight by USDA. The Potato Research and Promotion Plan objective is to carry out an effective and continuous coordinated program of research, development, advertising, and promotion designed to strengthen potatoes' competitive position, and to maintain and expand domestic and foreign markets for potatoes and potato products.

The Potato Research and Promotion Plan (7 CFR part 1207) became effective on March 9, 1972 and was implemented on September 15, 1972 when assessments began. The plan was amended in May 1984, to increase the maximum assessment rate from 1 cent per hundredweight to 0.5 percent of the previous 10-year average price received by growers.

Assessments under this program are used to fund promotional campaigns and to conduct research in the areas of U.S. marketing, and international marketing and to enable it to exercise its duties in accordance with the Plan.

The Potato Research and Promotion Plan is administered by the National Potato Promotion Board (Board), which is composed of producer members, importer members, and one public member appointed by the Secretary of Agriculture from nominations submitted by eligible groups. Producer membership on the Board is based upon potato production within each State. Importer members, limited to five, are based upon the amount of potatoes, potato products, and seed potatoes imported into the U.S. All members serve terms of three years.

AMS published in the Federal Register (63 FR 8014; February 18, 1999) its plan to review certain regulations, including the Potato Research and Promotion Plan, (conducted under the Potato Research and Promotion Act), under criteria contained in Section 610 of the Regulatory Flexibility Act (RFA; 5 U.S.C. 601-612). The plan was updated in the Federal Register on August 14, 2003 (68 FR 48574). Because many AMS regulations impact small entities, AMS decided, as a matter of policy, to review certain regulations which, although they may not meet the threshold requirement under section 610 of the RFA, warrant review. Accordingly, this notice and request for comments is made for the Potato Research and Promotion Plan.

The purpose of the review is to determine whether the Potato Research and Promotion Plan should be continued without change, amended, or rescinded (consistent with the objectives of the Potato Research and Promotion Act of 1971) to minimize the impacts on small entities. AMS will consider the continued need for the Potato Research and Promotion Plan; the nature of complaints or comments received from the public concerning the Potato Research and Promotion Plan; the complexity of the Potato Research and Promotion Plan; the extent to which the Potato Research and Promotion Plan overlaps, duplicates, or conflicts with other Federal rules, and, to the extent feasible, with State and local regulations; and the length of time since the Potato Research and Promotion Plan has been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the Potato Research and Promotion Plan.

Written comments, views, opinions, and other information regarding the Potato Research and Promotion Plan's impact on small businesses are invited.

The Mushroom Promotion, Research, and Consumer Information Act of 1990, (7 U.S.C. 6101 et seq. ) authorized the Mushroom Promotion, Research, and Consumer Information Program which is industry operated and funded, with oversight by USDA. The program's objective is to carry out an effective, continuous, and coordinated program of promotion, research, consumer information, and industry information designed to strengthen the mushroom industry's position in the marketplace, maintain and expand existing markets and uses for mushrooms, develop new markets and uses for mushrooms, and to carry out programs, plans, and projects designed to provide maximum benefits to the mushroom industry.

The program became effective on January 8, 1993, when the Mushroom Promotion, Research, and Consumer Information Order (7 CFR part 1209) was issued. Assessments began in 1993 at the rate of 0.0025 cents per pound and have fluctuated from 0.0010 to 0.0045 cents per pound. The current rate is 0.0024 cents per pound.

Assessments under this program are used to fund retail category management, research concerning nutritional attributes of mushrooms, foodservice training, and industry information and to enable it to exercise its duties in accordance with the Order.

The program is administered by the Mushroom Council (Council) which is composed of producers and may include importers, appointed by the Secretary of Agriculture from nominations submitted by eligible producers or importers. Producer membership on the Board is based upon mushroom production within each of four predestinated geographic regions within the U.S. and a fifth region representing importers, when imports, on average, equal or exceed 35,000,000 pounds of mushrooms annually. All members serve terms of three years.

AMS published in the Federal Register (63 FR 8014; February 18, 1999) its plan to review certain regulations, including the Mushroom Promotion, Research, and Consumer Information Order, (conducted under the Mushroom Promotion, Research, and Consumer Information Act), under criteria contained in Section 610 of the Regulatory Flexibility Act (RFA; 5 U.S.C. 601-612). The plan was updated in the Federal Register on August 14, 2003 (68 FR 48574). Because many AMS regulations impact small entities, AMS decided, as a matter of policy, to review certain regulations which, although they may not meet the threshold requirement under section 610 of the RFA, warrant review. Accordingly, this notice and request for comments is made for the Mushroom Promotion, Research, and Consumer Information Order.

The purpose of the review is to determine whether the Mushroom Promotion, Research, and Consumer Information Order should be continued without change, amended, or rescinded (consistent with the objectives of the Mushroom Promotion, Research, and Consumer Information Act of 1990) to minimize the impacts on small entities. AMS will consider the continued need for the Order; the nature of complaints or comments received from the public concerning the Order; the complexity of the Order; the extent to which the Order overlaps, duplicates, or conflicts with other Federal rules, and, to the extent feasible, with State and local regulations; and the length of time since the Order has been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the Order.

Written comments, views, opinions, and other information regarding the Order's impact on small businesses are invited.

The Bipartisan Campaign Reform Act of 2002, Pub. L. 107-155, 116 Stat. 81 (2002) (“BCRA”), amended the Federal Election Campaign Act of 1971, as amended, 2 U.S.C. 431 et seq. (the “Act”), in a number of respects. In the portion of BCRA relevant to this proceeding, Congress repealed the Commission's pre-BCRA regulations regarding “coordinated general public political communications” and directed the Commission to promulgate new regulations on “coordinated communications” in their place. Pub. L. 107-155, sec. 214(b), (c) (2002). On December 17, 2002, the Commission adopted regulations at 11 CFR 109.21 to implement BCRA's provisions regarding payments for communications that are coordinated with a candidate, a candidate's authorized committee, or a political party committee. See Final Rules and Explanation and Justification on Coordinated and Independent Expenditures, 68 FR 421 (Jan. 3, 2003) (“ 2002 Coordination Final Rules ”).

Under the Act, as amended by BCRA, an expenditure “made by any person in cooperation, consultation, or concert, with, or at the request or suggestion of” a Federal candidate, a candidate's authorized committee, the national, State, or local committee of a political party, or agents of any of the foregoing, is an in-kind contribution to the candidate or political party committee with which it has been coordinated, and is thus subject to the limitations, prohibitions, and reporting requirements of the Act. 2 U.S.C. 441a(a)(7)(B)(i) and (ii). An “expenditure” is any payment “made by any person for the purpose of influencing any election for Federal office.”  1 2 U.S.C. 431(9)(A)(i).

Thus, under the Act, a payment for a communication constitutes an in-kind contribution if two conditions are satisfied. First, the payment must qualify as an “expenditure”; that is, it must be made for the purpose of influencing a Federal election. Second, the payment must be made “in cooperation, consultation, or concert, with, or at the request or suggestion of” a candidate or political party committee or agents thereof. In addition, the Act provides that any disbursement for an “electioneering communication”  2 that is coordinated with a candidate, a candidate's authorized committee, a political party committee, or agents thereof, is an in-kind contribution to the candidate or political party supported by the communication. 2 U.S.C. 441a(a)(7)(C).

To implement these provisions of the Act, 11 CFR 109.21 sets forth a three-prong test for determining whether a communication is a coordinated communication, and therefore an in-kind contribution to, a candidate, a candidate's authorized committee, or a political party committee. See 11 CFR 109.21(a). First, the communication must be paid for by someone other than a candidate, a candidate's authorized committee, a political party committee, or their agents (the “payment prong”). See 11 CFR 109.21(a)(1). Second, the communication must meet one of four content standards (the “content prong”). See 11 CFR 109.21(a)(2) and (c). Third, the communication must meet one of five conduct standards (the “conduct prong”). See 11 CFR 109.21(a)(3) and (d). A communication must satisfy all three prongs to be a “coordinated communication.”

This rulemaking is being initiated in response to court decisions that invalidated one aspect of the “content prong” of the coordinated communication test. See Shays v. FEC, 337 F. Supp. 2d 28 (D.D.C. 2004) (“ Shays District ”), aff'd, Shays v. FEC, 414 F.3d 76 (D.C. Cir. 2005) (“ Shays Appeal ”) ( pet. for reh'g en banc denied Oct. 21, 2005) (No. 04-5352). As described more fully below, the District Court held the content prong as a whole to be invalid, while the Court of Appeals held the Commission's justification for one aspect of the content prong (specifically, the 120-day time frame in the fourth content standard) to be inadequate.

The purpose of the content prong is to “ensure that the coordination regulations do not inadvertently encompass communications that are not made for the purpose of influencing a Federal election.” 2002 Coordination Final Rules at 426. Accordingly, each of the four content standards that comprise the “content prong” identifies a category of communications that satisfies the content prong because its “subject matter is reasonably related to an election.” Id. at 427.

The first content standard is satisfied if the communication is an electioneering communication. See 11 CFR 109.21(c)(1). This content standard implements the statutory directive, described above, that disbursements for coordinated electioneering communications be treated as in-kind contributions to the candidate or political party supported by the communication.

The second content standard is satisfied by a public communication  3 made at any time that disseminates, distributes, or republishes campaign materials prepared by the candidate, the candidate's authorized committee, or agents thereof. See 11 CFR 109.21(c)(2). This content standard implements the Congressional mandate that the Commission's rules on coordinated communications address the “republication of campaign materials.” See Pub. L. 107-155, sec. 214(c)(1) (2002).

The third content standard is satisfied if a public communication made at any time expressly advocates the election or defeat of a clearly identified candidate for Federal office. See 11 CFR 109.21(c)(3); see also 11 CFR 100.22. The Commission concluded that express advocacy communications, no matter when such communications are made, can be reasonably construed only as for the purpose of influencing an election.

The fourth content standard is satisfied if a public communication (1) refers to a political party or a clearly identified Federal candidate; (2) is publicly distributed or publicly disseminated 120 days or fewer before an election;  4 and (3) is directed to voters in the jurisdiction of the clearly identified Federal candidate or to voters in a jurisdiction in which one or more candidates of the political party appear on the ballot. See 11 CFR 109.21(c)(4).

In adopting the 120-day time frame for public communications for the fourth content standard, the Commission sought to create a bright-line rule for public communications that fall short of express advocacy and do not republish campaign materials. The 120-day time frame “focuses the regulation on activity reasonably close to an election, but not so distant from the election as to implicate political discussion at other times.” 2002 Coordination Final Rules at 430. The Commission noted that its intent was “to require as little characterization of the meaning or the content of the communication, or inquiry into the subjective effect of the communication on the reader, viewer, or listener as possible.” 2002 Coordination Final Rules at 430 (citing Buckley v. Valeo, 424 U.S. 1, 42-44 (1976)). The Commission emphasized that the regulation “is applied by asking if certain things are true or false about the face of the public communication or with limited reference to external facts on the public record.” Id.

In adopting this time frame, the Commission relied on the fact that, in BCRA, Congress defined “Federal election activity” (“FEA”), in part, as voter registration activity “during the period that begins on the date that is 120 days” before a Federal election. The Commission reasoned that, in doing so, Congress “deem[ed] that period of time before an election to be reasonably related to that election.” Id. (citing 2 U.S.C. 431(20)(A)(i)).

In Shays District, the District Court held that the Commission's coordinated communication regulations did not survive the second step of Chevron review. 5 Shays District at 61-62. Specifically, the court concluded that limiting the coordinated communication definition to communications that satisfy the content standards at 11 CFR 109.21(c)(1) through (4) would “undercut[] [the Act's] statutory purpose of regulating campaign finance and preventing circumvention of the campaign finance rules.” Id. at 63. The District Court reasoned that communications that have been coordinated with a candidate, a candidate's authorized committee, or a political party committee have value for, and therefore are in-kind contributions to, that candidate or committee, regardless of the content, timing, or geographic reach of the communications. See Shays District at 63-64.

The Court of Appeals, however, disagreed “with the district court's suggestion that any standard looking beyond collaboration to content would necessarily ‘create an immense loophole,’ thus exceeding the range of permissible readings under Chevron step two.” Shays Appeal at 99-100. The Court of Appeals noted that “we can hardly fault the [Commission's] effort to develop an objective, bright-line test [that] does not unduly compromise the Act's purposes.” Shays Appeal at 99 (internal quotations omitted). Moreover, the Court of Appeals expressly “reject[ed] Shays and Meehan's argument that [the Act] precludes content-based standards under Chevron Step One.” Id. As the Court of Appeals emphasized, “time, place, and content may be critical indicia of communicative purpose. While election-related intent is obvious, for example, in statements urging voters to ‘elect’ or ‘defeat’ a specified candidate or party, the same may not be true of [other types of] ads [.]” Id. Instead, the Court of Appeals found that “the challenged regulation's fatal defect is not that the [Commission] drew distinctions based on content, time, and place, but rather that, contrary to the [Administrative Procedure Act], the Commission offered no persuasive justification for * * * the 120-day time-frame and the weak restraints applying outside of it.” Id. at 100. Specifically, the Court of Appeals concluded that, by limiting “coordinated communications” made outside of the 120-day window to communications containing express advocacy or the republication of campaign materials, “the [Commission] has in effect allowed a coordinated communication free-for-all for much of each election cycle.” Id.

The Court of Appeals found that the Commission had not adequately explained why “120 days reasonably defines the period before an election when non-express advocacy likely relates to purposes other than ‘influencing’ a Federal election.” Id. at 101. Regarding the Commission's reliance on Congress's use of a 120-day time frame in BCRA's definition of FEA as voter registration activity, the Court observed that the Commission had provided no evidence that voter registration activity occurs on cycles similar to “coordinated communications.” Id. at 100.

For these reasons, the Court of Appeals concluded that the Commission had not provided adequate explanation under the Administrative Procedure Act (“APA”) for the Commission's decision to exclude communications distributed more than 120 days before an election, unless a communication contains express advocacy or republishes campaign materials. Therefore, the Court of Appeals affirmed the District Court's invalidation of the Commission's coordinated communication rules. Id. at 101.

The Commission is considering the seven alternatives described below to comply with the Court of Appeals decision in Shays Appeal. The regulatory text for each alternative, except one, 6 is set forth at the end of this NPRM. The Commission seeks comment on each alternative, including responses to the following questions: Is the alternative too broad or too narrow? Would the alternative potentially include public communications that are not made for the purpose of influencing a Federal election and that therefore should not be restricted and treated as in-kind contributions? Conversely, would the alternative potentially exclude public communications that are made for the purpose of influencing a Federal election and therefore should be treated as an in-kind contribution, provided that the payment and conduct prongs are also satisfied? The Commission invites commenters to provide examples of communications from previous election cycles demonstrating that an alternative may be either underinclusive or overinclusive. Would the alternative address the Court of Appeals' concerns regarding the potential for circumvention of the Act and for corruption or the appearance of corruption? Would the alternative properly effectuate congressional intent? Would the alternative provide sufficient guidance to individuals and organizations seeking to be actively involved in politics and to comply with the Commission's coordination rules?

The Commission notes that the alternatives presented in this NPRM are not limited to the exact terms of the regulatory language set forth for each alternative at the end of the NPRM. Instead, as the narrative describing each alternative makes clear, the final rules may be a variation of one of the alternatives or even a combination of components from different alternatives. The Commission specifically invites comment on whether a combination of components from several different alternatives would be appropriate. The Commission also seeks comment on whether it should adopt a content standard that is not presented as one of the alternatives in this NPRM.

In addition, given that the content prong and the conduct prong of the coordinated communication test were intended to work together, the Commission seeks comment on whether adopting a given alternative with respect to the content prong would necessitate changing the conduct prong in 11 CFR 109.21(d) to ensure that only communications made for the purpose of influencing a Federal election are covered. If so, what amendments to the conduct prong should the Commission consider making?

Alternative 1 would retain the current coordinated communication test at 11 CFR 109.21, including the 120-day time frame in the fourth content standard at 11 CFR 109.21(c)(4)(ii), but would revise the Explanation and Justification for 11 CFR 109.21(c)(4)(ii) by providing further explanation supporting the 120-day time frame. 7

The Court of Appeals emphasized that justifying the 120-day time frame, or another time frame, requires the Commission to undertake a factual inquiry to determine whether the temporal line that it draws “reasonably defines the period before an election when non-express advocacy likely relates to purposes other than ‘influencing’ a Federal election” or whether it “will permit exactly what BCRA aims to prevent: evasion of campaign finance restrictions through unregulated collaboration.” Shays Appeal at 101-02. Accordingly, the Commission seeks comment on the following questions raised by the Court of Appeals in Shays Appeal regarding the 120-day time frame:

(1) Are a significant number of communications outside the 120-day period made for the purpose of influencing Federal elections, or are communications to influence Federal elections predominantly made within 120 days of an election? Are there specific examples from the 2004 election cycle of communications that the current coordination rules should have reached but did not or, conversely, examples of communications that the current rules should not have reached but did? Id. at 102.

(2) Do communications made for the purpose of influencing House, Senate, and Presidential races—all covered by this rule—occur during approximately the same periods in relation to the general election or the primary election, or should different time frames apply to each? Id.

(3) If the Commission were to retain the 120-day time frame, would persons aiming to influence elections shift spending outside of that period to avoid the rules' restrictions? Would the same phenomenon potentially take place if the Commission adopted a time frame longer or shorter than 120 days before a Federal election? In 2004, was there any evidence that spending shifted outside the 120-day period to avoid the rules' restrictions? Id.

The Commission specifically invites comments in the form of empirical data that show the time periods before an election in which electoral communications generally occur. Do outside persons make electoral communications during time frames that differ from candidates or parties? Do early electoral communications, for example, that occur more than 120 days before an election, have an effect on election results?

On its website, the Commission posts reports filed pursuant to the Act and Commission regulations. Some of these reports include information on independent expenditures by political committees filed under 11 CFR 104.4 and by persons other than political committees under 11 CFR 109.10. Additionally, all political committees must report coordinated expenditures along with all other in-kind contributions under 11 CFR 109.21(b)(3), while political party committees must report their coordinated party expenditures separately under 11 CFR 109.37. See Form 3X, line 25 (summarizing entries from Schedule F). For the convenience of commenters, the Commission has extracted these data from the reports and posted them on its website. 8 Do the data provide an empirical basis for retaining the 120-day time frame or establishing another time frame? For example, the data appear to indicate that, during the 2004 election cycle, (1) coordinated party expenditures made in connection with the general election were made mostly after September 1, 2004—roughly within 60 days of the general election, and (2) independent expenditures were made mostly after July 27, 2004—roughly within 90 days of the general election. 9 The Commission invites statistical analyses of these data. Specifically, to what extent is it possible to extrapolate from any identified patterns in party committee coordinated expenditures to expenditures for coordinated communications by outside groups? Do the data support the conclusion that communications made for the purpose of influencing an election are almost always made, or are generally made, within the last 60 to 90 days before an election?

The Commission also seeks comment on whether other existing analyses provide a basis for choosing a particular time frame. See, e.g. , Michael M. Franz et al., The Election after Reform: Money, Politics and the Bipartisan Campaign Reform Act ch. 7 (Michael J. Malbin ed., Rowman and Littlefield, forthcoming Mar. 2006), available at http://www.cfinst.org/studies/ElectionAfterReform/chapters.html; Ken Goldstein & Joel Rivlin, Political Advertising in the 2002 Elections ch. 3 (forthcoming), available at http://polisci.wisc.edu/tvadvertising; Craig B. Holman, Buying Time 2000: Television Advertising in the 2000 Federal Elections 52-59 (2001), available at http://www.brennancenter.org/programs/buyingtime2000.html; Jonathan Krasno & Kenneth Goldstein, The Facts About Television Advertising and the McCain-Feingold Bill, 35(2) PS: Political Science and Politics 207 (2002), draft available at http://www.cfinst.org/studies/papers/goldstein&krasno.pdf; Donald F. McGahn, Remarks at Campaign Finance Reform Forum, Campaign Finance Institute (Jan. 14, 2005), 10 available at www.cfinst.org/transcripts/pdf/1-14-05_Transcript_PanelThree.pdf.; see also data compiled by the University of Wisconsin Advertising Project, available at http://polisci.wisc.edu/tvadvertising.

The Commission seeks comment on whether a time frame other than 120 days would be more appropriate in bringing public communications that are made for the purpose of influencing a Federal election within the coordination regulations, while filtering out public communications that are not made for this purpose. 11 Does empirical evidence support the adoption of a different time frame? Some States hold primary elections early in the election year. Under the current rule, a public communication that refers to a clearly identified candidate and is distributed within the 120-day period preceding a primary election would satisfy the content standard at 11 CFR 109.21(c)(4), but the same public communication distributed shortly after the primary but still more than 120 days before the subsequent general election would not satisfy that standard. Accordingly, rather than retain the current rule covering communications made within the 120-day period before an election, whether primary or general, should the Commission adopt a time frame that covers an uninterrupted period of time starting 120 days (or some other time period) before the primary election up to and including the day of the general election?

The Commission also invites comment on whether to adopt a time frame covering the period from January 1 of each election year through the day of the general election. Would such an “election year” time frame begin too late for States that hold primaries early in the year? Conversely, would an “election year” time frame begin too early for States that hold primaries in September? Would such a time frame be appropriate for Presidential elections?

In addition, the Commission seeks comment on whether to adopt a tiered approach, under which the range of communications that satisfy the fourth content standard would depend on the communication's proximity to an election. For example, for communications made within 120 days before an election, the fourth content standard could be modified to capture any public communication that refers to a political party or clearly identified Federal candidate and is directed to the voters in the relevant geographical areas. For communications made between 120 and 240 days before an election, the fourth content standard could capture only public communications that promote, attack, support, or oppose (“PASO”) a political party or a clearly identified Federal candidate. 12 The Commission invites commenters to provide examples of communications from previous election cycles to show whether a given time frame would be either underinclusive or overinclusive.

Alternative 3 would revise 11 CFR 109.21(c)(4) by eliminating any time restriction from the fourth content standard. Specifically, Alternative 3 would remove the requirement that a public communication be publicly distributed or otherwise publicly disseminated 120 days or fewer before an election. See 11 CFR 109.21(c)(4)(ii). Alternative 3 would, however, retain the requirements that (1) the public communication refer to a political party or clearly identified candidate and (2) be directed to voters in the jurisdiction of the clearly identified candidate or to voters in the jurisdiction in which one or more candidates of the political party appear on the ballot. See 11 CFR 109.21(c)(4)(i) and (iii). Thus, under this alternative, any public communication that refers to a clearly identified candidate or political party and is directed to voters in the relevant jurisdiction would satisfy the content prong of the coordinated communication test, regardless of when it is distributed.

The Commission seeks comment on whether the fourth content standard without a time frame would still be effective in distinguishing communications made for the purpose of influencing a Federal election from communications made for other purposes, such as communications made for the purpose of lobbying for or against certain legislation. The Court of Appeals noted that “to qualify as ‘expenditure’ in the first place, spending must be undertaken ‘for the purpose of influencing' a federal election * * * [T]ime, place, and content may be critical indicia of communicative purpose. While election-related intent is obvious, for example, in statements urging voters to ‘elect' or ‘defeat' a specified candidate or party, the same may not be true of ads identifying a federal politician but focusing on pending legislation[.]” Shays Appeal at 99. Does the fact that a communication refers to a clearly identified candidate or a political party and is directed to voters in the relevant geographical area by itself provide strong evidence that the communication is made for the purpose of influencing a Federal election, even if the communication is made a year or more before that election? Does the Commission have the statutory authority to regulate “other categories of non-electioneering speech—non-express advocacy, for example—outside the 120 days”? Id. at 101. How should the Commission separate communications made for the purpose of influencing a Federal election from those without such purpose?

The Commission also invites commenters to provide examples of communications from previous election cycles to show whether Alternative 3 would be either underinclusive or overinclusive.

Alternative 4 would replace the content standard in 11 CFR 109.21(c)(4) with a new standard providing that a public communication would satisfy the content prong of the coordinated communication test if it refers to a political party or a clearly identified Federal candidate, is directed to voters in the jurisdiction of the clearly identified Federal candidate or to voters in a jurisdiction in which one or more Federal candidates of a political party are on the ballot, and the communication PASOs the political party or the clearly identified Federal candidate. 13 Would such a standard have the potential to be unconstitutionally vague in practical application? Or, conversely, would such a standard “ ‘provide explicit standards for those who apply them ’ and ‘give the person of ordinary intelligence a reasonable opportunity to know what is prohibited’ ”? McConnell v. FEC, 540 U.S. 93, 170 n.64 (2003) (quoting Grayned v. City of Rockford, 408 U.S. 104, 108-109 (1972)).

Alternatively, the Commission invites comment on whether Alternative 4, instead of using a PASO standard, should create a safe harbor exemption from the coordinated communication rules for certain kinds of communications. A communication that satisfies these criteria would, as a matter of law, not be treated as a coordinated communication. For example, such criteria could include the following:

• The communication is devoted exclusively to a particular pending legislative or executive branch matter.

• The communication's reference to a clearly identified Federal candidate is limited to urging the public to contact that candidate to persuade the candidate to take a particular position on the pending legislative or executive branch matters.

• The communication does not refer to the political party affiliation or the political ideology ( e.g. , “liberal,” “conservative,” etc.) of a clearly identified Federal candidate.

• The communication does not refer to a clearly identified Federal candidate's record or position on any issue.

• The communication does not refer to a clearly identified Federal candidate's character, qualifications, or fitness for office.

• The communication does not refer to an election, voters or the voting public, or anyone's candidacy.

If this criteria-based approach is adopted, should any of the criteria be eliminated from, or added to, the list? If adopted, should the regulation provide that a communication must meet all of the criteria on the list to qualify for the safe harbor exemption or should the regulation follow a more flexible approach and provide that a communication may meet some but not necessarily all of the criteria on the list and still qualify for the exemption? Should satisfaction of one or more specific criteria on the list, by itself, be sufficient to qualify for the exemption? By contrast, should any one or more criteria be critical to the analysis such that failure to meet these criteria would prohibit an organization from taking advantage of the safe harbor?

The Commission seeks comment as to whether Alternative 4 should incorporate a time period limitation, such as a specific number of days before an election. If so, should this time period be 120 days before an election or should a different time frame be adopted? The Commission invites commenters to submit supporting empirical data. The Commission also invites commenters to provide examples of communications from previous election cycles to show whether Alternative 4 would be either underinclusive or overinclusive.

Alternative 5 would adopt a bifurcated test under which application of the 120-day time frame would depend on the identity of the person paying for the public communication. If a registered political committee, or an organization that is required to register as a political committee, pays for a public communication that refers to a political party or a clearly identified Federal candidate and the public communication is directed to voters in the jurisdiction of the clearly identified candidate or to voters in a jurisdiction in which one or more of the candidates of the political party appear on the ballot, then that public communication would be deemed as a matter of law to have been made for the purpose of influencing a Federal election. Such a public communication, when paid for by a political committee, would be deemed to have been made for the purpose of influencing a Federal election regardless of when it is distributed, because a political committee is an organization whose major purpose is to influence elections. 14 Alternatively, should the time frame be eliminated only for public communications that are paid for by registered political committees or organizations that are required to register as political committees if the communication PASOs a political party or a clearly identified Federal candidate?

Under Alternative 5, if the person paying for the public communication is not a registered political committee or an organization that is required to register as a political committee, then the public communication would satisfy the content standard at 11 CFR 109.21(c)(4) only if it occurs 120 days or fewer before an election or during whatever other time frame might be adopted. Are there data to justify the 120-day window? Do the data support another time frame?

The Commission seeks comment on how such a bifurcated test would apply to other entities, such as non-Federal candidates and their campaign organizations. The Commission further seeks comment on how such a bifurcated test should apply to entities organized under section 527 of the Internal Revenue Code that are not registered with the Commission as political committees. The Commission also seeks comment on the effect that this alternative approach would have on a candidate who has contacts that meet the conduct standard with an organization that is not registered as a political committee. If that organization is subsequently found to have inappropriately failed to register as a political committee based on activity that was not known to the candidate, should the Commission provide in the regulation that the candidate would not be deemed to have accepted an in-kind contribution from the organization?

In addition, the Commission invites commenters to provide examples of communications from previous election cycles to show whether Alternative 5 would be either underinclusive or overinclusive.

Alternative 6 would replace the fourth content standard in 11 CFR 109.21(c)(4) with a new standard that would closely track the statute and simply require a communication to be a public communication made for the purpose of influencing a Federal election. The effect of adopting Alternative 6 would be to restrict some public communications that are not covered by current 11 CFR 109.21(c)(4), i.e. , communications that are made for the purpose of influencing a Federal election but that are either: (1) Made more than 120 days before an election, or (2) made at any time and do not refer to a political party or a clearly identified Federal candidate. In addition, Alternative 6 would exclude from regulation some communications that are covered by current 11 CFR 109.21(c)(4), i.e. , communications that are made within 120 days of an election and that do refer to a political party or a clearly identified Federal candidate but that are not made for the purpose of influencing a Federal election.

Whether a given public communication is for the purpose of influencing a Federal election would depend on the facts and would be decided on a case-by-case basis. This is the approach some Commissioners used before 2002 when the Commission adopted a content prong for its coordinated communication regulations. Under such a case-by-case approach, some public communications would be treated as having been made for the purpose of influencing a Federal election, even though no Federal candidate or political party is referenced in the communication, and regardless of how far in advance of an election such a communication is made. This approach would result in some public communications being restricted as coordinated communications without having to meet a content standard defined in the Commission's regulations. The Commission seeks comment on whether such a case-by-case approach is appropriate and whether it would provide sufficient guidance to candidates, their authorized committees, political party committees, and outside organizations. Would such a standard have the potential to be unconstitutionally vague in practical application? Or, conversely, would such a standard “ ‘provide explicit standards for those who apply them' and ‘give the person of ordinary intelligence a reasonable opportunity to know what is prohibited’ ”? McConnell , 540 U.S. at 170 n.64 (quoting Grayned, 408 U.S. at 108-109); compare Buckley v. Valeo, 424 U.S. 1, 24, n. 24, 46-47, n. 53, 78 (Payments for media advertisements “controlled by or coordinated with the candidate” are treated as contributions, and “for the purpose of influencing” phrase “presents fewer problems in connection with the definition of a contribution because of the limiting connotation created by the general understanding of what constitutes a political contribution.”). The Commission also invites commenters to provide examples of communications from previous election cycles to show whether Alternative 6 would be either underinclusive or overinclusive.

Alternative 7 would eliminate the entire content prong in 11 CFR 109.21(c), and would replace it with the requirement that the communication be a public communication as defined in 11 CFR 100.26. 15 Alternative 7 would also make some conforming amendments. Alternative 7 would be based on the assumption that if an organization or individual works with a candidate or a political party in making a public communication, then the communication inherently has value to the political entity it is coordinated with, regardless of timing or content. Accordingly, in Alternative 7, any public communication that satisfies the conduct prong of the coordinated communication test at 11 CFR 109.21(d) would be deemed to have been made for the purpose of influencing a Federal election and thus be a “coordinated communication,” regardless of whether it refers to a clearly identified Federal candidate or political party and regardless of when or to whom the communication is distributed.

The Commission notes that, even though Alternative 7 would eliminate the entire content prong, it would nonetheless comply with the statutory requirement that disbursements for coordinated electioneering communications be in-kind contributions to the candidate supported by them and with the congressional mandate that the Commission's coordination rules address the “republication of campaign materials.” Specifically, under Alternative 7, all public communications (including electioneering communications and communications that republish campaign materials) would be coordinated communications as long as they satisfy the conduct prong.

The Commission seeks comment on whether the conduct prong by itself, without any content prong, would be effective in distinguishing between public communications made for the purpose of influencing a Federal election and public communications made for other purposes, such as public communications made for the purpose of lobbying for or against certain legislation, or for supporting charitable or other non-political causes. Assuming that it is true that a candidate or political party would not coordinate with an outside organization or individual if the resulting communication did not have value for the candidate or political party, does such value necessarily consist of influencing the candidate's election or the election of a political party's candidates? Would the conduct prong by itself, without any content prong, have the potential to be unconstitutionally vague in practical application? Or, conversely, would such a regulation “ ‘provide explicit standards for those who apply them’ and ‘give the person of ordinary intelligence a reasonable opportunity to know what is prohibited’ ”? McConnell, 540 U.S. at 170 n.64 (quoting Grayned, 408 U.S. at 108-109). The Commission also invites commenters to provide examples of communications from previous election cycles to show whether Alternative 7 would be either underinclusive or overinclusive.

The Commission also seeks comment on the following related issues.

In the event that the Commission decides to retain a content prong, the Commission seeks comment on modifying the requirement in the fourth content standard that a public communication must be directed to voters in the jurisdiction of the clearly identified candidate or to voters in a jurisdiction in which one or more candidates of the political party appear on the ballot. See 11 CFR 109.21(c)(4)(iii). While the Act and Commission regulations defining “electioneering communications” require that 50,000 or more persons be able to receive the communication in the relevant geographic area, the fourth content standard does not specify how many persons must be able to receive a communication for it to be classified as a coordinated communication. See 2 U.S.C. 434(f)(3)(C); 11 CFR 100.29(b)(3)(ii)(A) and (b)(5). Should 109.21(c)(4)(iii) be deemed satisfied if any person in the relevant geographic area can receive the communication? Should 11 CFR 109.21(c)(4)(iii) be changed to specify a minimum number of persons that must be able to receive the communication? If so, what should the required minimum number of persons be? Has the current regulation without a required minimum number presented any difficulties to, or created any confusion for, those seeking to comply with it?

The Commission notes that the fourth content standard applies to “public communications,” and thus to communications made by means of newspapers, magazines, periodicals, billboards, mass mailing, and telephone banks. See 11 CFR 100.26. Is it appropriate to set a minimum for the “directed to voters” requirement that would exclude small and medium sized publications? If so, should the minimum number be based on the number of copies distributed or on estimates of the number of readers reached by the publications? Similarly, the definition of “public communication” includes limited communications, such as 501 pieces of mail or 501 telephone calls of an identical or substantially similar nature. See 2 U.S.C. 431(23) and (24); 11 CFR 100.26, 100.27, 100.29. Would it be appropriate to exclude such limited mass mailings or telephone banks from the “directed to voters” requirement as de minimis even though they come within the Commission's definition of “public communication”?

Under the current rules, the second and third content standards ( i.e. , the republication of campaign material and the express advocacy standards) do not contain a “directed to voters” requirement. Are communications that satisfy these standards so clearly made for the purpose of influencing a Federal election that a “directed to voters” requirement is unnecessary? In the alternative, should such a requirement be added to these two content standards as well?

The Commission also seeks comment on whether to exempt from the coordination regulations communications that are distributed in the jurisdiction of a clearly identified congressional candidate when such distribution is part of, and incidental to, a larger advertising campaign. For example, an advertisement distributed nationally on cable television that refers to a U.S. Representative seeking reelection as one of several sponsors of a piece of legislation will presumably reach voters in the U.S. Representative's district. In such a case, the voters in the U.S. Representative's district would be reached only incidentally as part of the larger lobbying campaign. Would an exemption for communications that reach voters in the jurisdiction of the clearly identified congressional candidate only incidentally provide a reliable way of distinguishing communications that are made for the purpose of influencing a Federal election from lobbying or issue advocacy communications? Would such a standard be sufficiently clear to provide persons with prior notice of the types of communications that are affected? For such a standard to provide effective prior notice, must the Commission specify how many viewers are “incidental”? In the alternative, should the Commission define “incidental” in terms of a certain ratio between the number of persons who can receive the communication in the State or district of the clearly identified Senate or House candidate and the number of persons who can receive the communication outside that State or district? Should such an exemption be limited to public communications that are distributed nationwide? The Commission also invites comment on whether the regulations should provide that such an exemption would apply only if a communication does not PASO the clearly identified candidate.

The Commission invites comment regarding the application of the coordinated communication test to situations in which Federal candidates endorse, or solicit funds for, other Federal and non-Federal candidates or State ballot initiatives. In Advisory Opinion 2004-01, the Commission considered a television advertisement that featured President Bush endorsing a congressional candidate. The advertisement was publicly distributed within 120 days of the Presidential primary in the State in which the advertisement aired. The Commission concluded that the “material involvement” conduct standard in 11 CFR 109.21(d)(2) was satisfied because the President's agents “review[ed] the final script in advance of the President's appearance in the advertisements for legal compliance, factual accuracy, quality, consistency with the President's position and any content that distracts from or distorts the ‘endorsement’ message that the President wishes to convey.”  16 Advisory Opinion 2004-01. Similarly, in Advisory Opinion 2003-25, the Commission considered an advertisement featuring a U.S. Senator's endorsement of a candidate for mayor. In that opinion, the Commission determined that it was highly implausible that a Federal candidate would appear in a communication endorsing a local candidate without being materially involved in one or more of the decisions listed in the “material involvement” conduct standard.

The Commission seeks comment on whether to exempt from the coordinated communication rules a Federal candidate's appearance or use of a candidate's name in a communication to endorse other Federal or non-Federal candidates. Do such endorsements benefit the endorsing candidate? The Commission also invites comment on whether any such exemption should be limited to communications that do not PASO the endorsing candidate. Does the fact that the endorsing candidate appears in the communication inevitably promote the endorsing candidate?

Similarly, the Commission seeks comment on whether to exempt from the coordinated communication rules a Federal candidate's appearance in a communication that solicits funds for other Federal or non-Federal candidates, party committees, political action committees, or other political committees. Do such solicitations benefit the candidate who makes them? The Commission also invites comment on whether any such exemption should be limited to communications that do not PASO the soliciting candidate, or, in the alternative, do not expressly advocate the election or defeat of the soliciting candidate.

The Commission also seeks comment on whether a similar exemption from the coordinated communication rules should also apply to a Federal candidate's appearance in communications that endorse, or solicit funds for, State ballot initiatives.

Advisory Opinion 2004-01, discussed above, concerned President Bush's appearance in a television advertisement paid for by a congressional candidate where President Bush endorsed that congressional candidate. The Commission determined that any airing of the advertisement that occurred more than 120 days before the Presidential primary in the State in which the advertisement aired was not an in-kind contribution to President Bush because it did not satisfy the fourth content standard ( i.e. , 11 CFR 109.21(c)(4)). In making this determination, the Commission looked at whether the communication was aired within 120 days before the non-paying candidate's ( i.e. , President Bush's) election rather than whether it was aired within 120 days before the paying congressional candidate's election. The regulatory text for Alternative 1 reflects the Commission's proposal to amend its coordinated communication rules to incorporate the approach taken in Advisory Opinion 2004-01 and to make clear that the time frame applies only to the election of a Federal candidate who is clearly identified and who has not paid for the communication.

This alteration would clarify that no in-kind contribution is made under the coordinated communication regulations to a candidate for Federal office who is referred to in a public communication if the referenced candidate will not appear as a Federal candidate on a ballot within 120 days of the distribution of the communication. See Advisory Opinion 2005-18, Concurring Opinion of Chairman Thomas, Vice Chairman Toner, Commissioners Mason, McDonald, and Weintraub.

For example, a Senator whose reelection is not until 2008 appears in an advertisement with a 2006 House candidate. The advertisement is aired within 120 days of the House candidate's election, is paid for by the House candidate's campaign committee, and is aired in the State where the Senator will seek reelection in 2008. This advertisement would not be an in-kind contribution to the Senator because the advertisement was not aired within 120 days of the Senator's 2008 election.

The Commission seeks comment on whether the proposed language properly effectuates this clarification.

The conduct prong of the Commission's coordinated communication regulations was not challenged in Shays v. FEC. Nonetheless, the Commission is taking this opportunity to evaluate how certain aspects of the conduct prong work in practice.

The first conduct standard of the coordinated communications test is satisfied if a communication is created, produced or distributed at the request or suggestion of a candidate, a candidate's authorized committee, or a political party committee, or their agents. See 11 CFR 109.21(d)(1). The Commission invites comment on whether, even if the Commission decides to retain the content prong of the coordinated communication test, it should provide that if the first conduct standard is satisfied, the communication would automatically qualify as a coordinated communication without also having to satisfy any of the standards contained in the content prong. If a public communication is made at the request or suggestion of a candidate or a political party, then does that communication presumptively have value to the political entity that it was coordinated with, regardless of timing or content? Would such a proposal capture communications that are not made for the purpose of influencing elections? Are there examples of public communications, such as lobbying communications or communications supporting charitable or other non-political causes, that are made at the “request or suggestion” of a Federal candidate but that do not have value for the candidate's campaign?

The fourth standard of the conduct prong of the coordinated communication rules involves common vendors, and the fifth standard involves former employees. See 11 CFR 109.21(d)(4) and (5). The Commission intended these standards to implement Congress's requirement in BCRA that the Commission address “the use of a common vendor” and “persons who previously served as an employee of a candidate or a political party committee” in the context of coordination. BCRA, Pub. L. No. 107-55, sec. 214(c)(2) and (3) (2002).

The “common vendor” conduct standard is satisfied if (1) the person paying for the communication contracts with, or employs, a “commercial vendor” to create, produce, or distribute the communication, (2) the commercial vendor has a previous or current relationship with the political party committee or the clearly identified candidate referred to in the communication that puts the commercial vendor in a position to acquire material information about the plans, projects, activities, or needs of the candidate or political party committee, and (3) the commercial vendor uses or conveys material information to the person paying for the communication about the plans, projects, activities, or needs of the candidate or political party committee, or material information used by the commercial vendor in serving the candidate or political party committee. See 11 CFR 109.21(d)(4).

The “former employee” conduct standard is satisfied if (1) the person paying for the communication was, or is, employing a person who was an employee of the candidate or the political party committee clearly identified in the communication, and (2) the former employee uses or conveys material information to the person paying for the communication about the plans, projects, activities, or needs of the candidate or political party committee, or material information used by the former employee in serving the candidate or political party committee. See 11 CFR 109.21(d)(5).

The first three conduct standards in 11 CFR 109.21(d)(1)-(3) are satisfied only if either the principals themselves ( i.e. , candidates, their authorized committees, or political party committees) or their agents coordinate with the person paying for the communication. 17 However, because commercial vendors and former employees might not be agents of a candidate or a political party committee at the time they use or convey material information to a person paying for a communication, the “common vendor” and the “former employee” conduct standards can be satisfied by persons other than the principals themselves or their agents. The Commission seeks comment on whether it should change the coordinated communication regulations to cover common vendors and former employees only if these common vendors and former employees are agents under the Commission's definition of agent in 11 CFR 109.3. 18 Does the Commission have authority under the Act to make this change? If the Commission does make this change, would such agents then be covered by the first three conduct standards in 11 CFR 109.21(d)(1)-(3) or would the “common vendor” and the “former employee” conduct standards still cover some activities not captured by the first three conduct standards? If the Commission revises the common vendor and former employee conduct standards to cover only common vendors and former employees who are also agents, would that render these two conduct standards superfluous? If so, should the Commission then eliminate the conduct standards in 11 CFR 109.21(d)(4) and (5)? Given that BCRA specifically required the Commission to promulgate regulations that addressed payments for the use of common vendors and for communications directed or made by persons who previously served as employees of a candidate or political party, does the Commission have authority under the Act to eliminate 11 CFR 109.21(d)(4) and (5)?

In the rulemaking proceeding that resulted in the 2002 Coordination Final Rules, the Commission received many comments on the common vendor conduct standard. Some of the comments expressed concern about the potential liability that would attach under the common vendor standard to candidates and party committees who employ the same vendors as other candidates and party committees because of the limited number of qualified vendors in a given geographic area.

The Commission addressed this and other concerns in the 2002 Coordination Final Rules by limiting the common vendor conduct standard to commercial vendors whose usual and normal business includes the creation, production, or distribution of communications; who have provided certain enumerated services to a candidate or party committee that put the vendor in a position to acquire information about the plans, projects, activities or needs of the candidate or party committee material to the creation, production, or distribution of the communication; who provide the specified services during the current election cycle; and who use or convey information about the candidate's or party committee's campaign plans, projects, activities or needs that is material to the creation, production, or distribution of the communication. See 68 FR 436-37. The Commission also excluded lobbying activities and information not related to a campaign from the scope of the rule.

The Commission stated that it did not anticipate that a person who hired a vendor and followed prudent business practices would be inconvenienced by the common vendor conduct standard. See id. at 437. The Commission now invites comments on whether this supposition has proven to be correct.

The Commission also seeks comment on whether it should create a rebuttable presumption that a common vendor or former employee has not engaged in coordinated conduct under 11 CFR 109.21(d)(4) and (5), if the common vendor or former employee has taken certain specified actions, such as the use of so-called “firewalls,” to ensure that no material information about the plans, projects, activities, or needs of a candidate or political party committee is used or conveyed to a third party. The Commission considered and rejected proposals to establish rebuttable presumptions and safe harbors in the common vendor conduct standard in the 2002 Coordination Final Rules. See id. More recently, however, the Commission recognized in the context of the first three conduct standards (11 CFR 109.21(d)(1)-(3)) that the presence of a firewall between staff assigned by a political committee to work directly with a candidate and staff assigned by the political committee to work on advertisements supporting that candidate was sufficient to refute certain allegations of coordination in a particular case. See Matter Under Review (“MUR”) 5506, First General Counsel's Report at 5-8 (Commission found no reason to believe EMILY's List had violated section 441a of the Act based, in part, on a representation by EMILY's List that it had created a firewall whereby employees, volunteers, and consultants who handle advertising buys are “barred, as a matter of policy, from interacting with federal candidates, political party committees, or the agents of the foregoing. These employees, volunteers and consultants are also barred from interacting with others within EMILY's List regarding specified candidates or officeholders.”).

If the Commission decides to establish a rebuttable presumption or safe harbor in the common vendor and former employee conduct standards, what factors should the Commission consider in determining whether an effective firewall exists? Is the role of a firewall best addressed on a case-by-case basis through the enforcement process? Aside from setting up firewalls, are there other actions by a common vendor, former employee, or the political committees that engage them that the Commission should consider a safe harbor?

The common vendor conduct standard and the former employee conduct standard incorporate the current election cycle  19 as a temporal limit on their application. See 11 CFR 109.21(d)(4)(ii), (d)(5)(i). In the 2002 Coordination Final Rules , the Commission explained that “[t]he election cycle provides a clearly defined period of time that is reasonably related to an election.” 2002 Coordination Final Rules at 436. The Commission invites comments on how this temporal limit works in practice. Is information about a candidate's campaign plans, products, activities, or needs of such an ephemeral nature that its strategic significance dissipates shortly after the information is communicated, which may be long before the end of the election cycle, or does the information remain relevant throughout the election cycle? If the Commission concludes that the strategic value of such information does not necessarily last throughout an entire election cycle, should the Commission change the common vendor and former employee conduct standards to cover a shorter time frame? If so, how long should such a time frame be? Should the Commission adopt a 60-day time frame based on the Commission's determination, underlying its longstanding rule with respect to polling results, that such information outside of the 60-day time frame is of very little value?  20 Alternatively, does the Commission's experience with the polling regulations provide evidence that the Commission should adopt a 180-day window for its coordination regulations? Alternatively, would retention of the election cycle time frame in the current rule more accurately align the rule with existing campaign practices?

The Commission seeks comment on whether to create a safe harbor that would make clear as a matter of law that (1) the use of publicly available information in connection with a public communication by any person paying for that public communication does not satisfy any of the conduct standards, and (2) a candidate's or political party committee's conveyance of publicly available information to any person paying for a public communication does not satisfy any of the conduct standards. This safe harbor in proposed 11 CFR 109.21(g) would cover situations in which a candidate, authorized committee, or political party committee has conveyed information publicly, such as, for example, at a campaign rally or on the candidate's or party's Web site or in a press release, or where such information is otherwise publicly available, such as having appeared in newspaper, television, or other press reports. Should such a safe harbor also cover situations in which the person paying for the communication has received the information both from the candidate, authorized committee, or political party committee, in a non-public context and also from a public source? How should the rules treat a situation in which the person paying for the communication did, in fact, receive the information only from the candidate, authorized committee, or political party committee, but could also have obtained the same information from a public source?

The Commission also seeks comment on whether, if it adopts this safe harbor for the use of publicly available information, the burden of establishing whether the information was publicly available should be on the Commission or on the party seeking to make use of the safe harbor. If that burden were on the Commission, how would the Commission be able to establish that the information was not publicly available at the relevant time, given that some information, especially information available through the Internet, may be in the public domain only for a limited time period?

If the Commission broadens or eliminates the content standard for coordinated communications, the Commission seeks comment on whether it would be appropriate to narrow or otherwise modify any of the conduct standards. Are the conduct and content standards properly understood as dynamic and working in conjunction with each other?

The payment prong (11 CFR 109.21(a)(1)) of the Commission's coordinated communication regulations was not challenged in Shays v. FEC . Nonetheless, the Commission is taking this opportunity to seek comment on whether it should clarify one aspect of the payment prong. Specifically, the Commission seeks comment on whether “in whole or in part” should be added to 11 CFR 109.21(a)(1) of the coordinated communication rules. The amendment would clarify that the payment prong is satisfied if a person other than the candidate, the candidate's authorized committee, or political party committee, pays for only part of the costs of the communication. Under this proposed amendment, 11 CFR 109.21(a)(1) would be revised to read, “Is paid, in whole or in part, by a person other than that candidate, authorized committee, political party committee, or agent of any of the foregoing.” Does this amendment best effectuate the intended clarification of the payment prong? Would this clarification alter the application of the content or conduct prongs of the coordinated communication rules? Would this clarification inadvertently capture communications properly attributed under the time and space rules set forth at 11 CFR 106.1(a)(1)?

The Commission notes that its “party coordinated communication” regulation at 11 CFR 109.37 also contains a three-prong test for determining whether a communication is coordinated between a candidate and a political party committee. Although not addressed in the Shays cases, the “party coordinated communication” test in 11 CFR 109.37 has a content prong that is substantially the same as the one for “coordinated communications” in 11 CFR 109.21(c). 21 See 11 CFR 109.37(a)(2). If the Commission decides to revise current 11 CFR 109.21 as described in the alternatives set forth above, the Commission seeks comment on whether it should make conforming changes to the party coordinated communication regulations in 11 CFR 109.37.

In addressing the conduct of national party officers under the national party soft money ban at 2 U.S.C. 441i(a), the Supreme Court stated, “[n]othing on the face of [section 441i(a)] prohibits national party officers, whether acting in their official or individual capacities, from sitting down with state and local party committees or candidates to plan and advise how to raise and spend soft money. As long as the national party officer does not personally spend, receive, direct, or solicit soft money, [section 441i(a)] permits a wide range of joint planning and electioneering activity.” McConnell , 540 U.S. at 160 (citing to Brief for Intervenor- Defendants Sen. John McCain et al. in No. 02-1674 et al. , p. 22, which stated that “BCRA leaves parties and candidates free to coordinate campaign plans and activities, political messages, and fund raising goals with one another”); see also Advisory Opinion 2005-02 (incorporating such principles). The Commission seeks comment on the relevance, if any, of this statement to the Commission's coordinated communication regulations. Does McConnell render the application of the conduct standards to coordination between a candidate and a political party committee at 11 CFR 109.37(a)(3) obsolete? Does it preclude a finding of coordination under the material involvement prong at 11 CFR 109.21(d)(2)? Does the relationship between national party candidates and their parties justify adopting more permissive conduct standards for “party coordinated communications” in 11 CFR 109.37 than for coordinated communications in 11 CFR 109.21? If so, how should the conduct standards for “party coordinated communications” be amended?

The Commission certifies that the attached proposed rules, if promulgated, would not have a significant economic impact on a substantial number of small entities. The basis for this certification is that any individuals and not-for-profit entities that would be affected by these proposed rules would not be “small entities” under 5 U.S.C. 601. The definition of “small entity” does not include individuals, but classifies a not-for-profit enterprise as a “small organization” if it is independently owned and operated and not dominant in its field. 5 U.S.C. 601(4).

Moreover, any State, district, and local party committees that would be affected by these proposed rules would be not-for-profit committees that do not meet the definition of “small organization.” State political party committees are not independently owned and operated because they are not financed and controlled by a small identifiable group of individuals, and they are affiliated with the larger national political party organizations. In addition, the State political party committees representing the Democratic and Republican parties have a major controlling influence within the political arena of their State and are thus dominant in their field. District and local party committees are generally considered affiliated with the State committees and need not be considered separately.

Furthermore, any separate segregated funds that would be affected by these proposed rules would be not-for-profit political committees that do not meet the definition of “small organization” because they are financed by a combination of individual contributions and financial support for certain expenses from corporations, labor organizations, membership organizations, or trade associations, and therefore are not independently owned and operated.

Most of the other political committees that would be affected by these proposed rules would be not-for-profit committees that do not meet the definition of “small organization.” Most political committees are not independently owned and operated because they are not financed by a small identifiable group of individuals. In addition, most political committees rely on contributions from a large number of individuals to fund the committees' operations and activities.

To the extent that any State party committees representing minor political parties or any other political committees might be considered “small organizations,” the number that would be affected by this proposed rule would not be substantial, particularly the number that would coordinate expenditures with candidates or political party committees in connection with a Federal election. Accordingly, to the extent that any other entities may fall within the definition of “small entities,” any economic impact of complying with these rules would not be significant.

With respect to commercial vendors whose clients include political party committees or other political committees, the proposed rules consider ways to reduce the existing regulatory restrictions. Thus, rather than adding an economic burden, the proposed rules would potentially have a beneficial economic impact on such commercial vendors.

For the reasons set out in the preamble, the Federal Election Commission proposes to amend Subchapter A of Chapter I of Title 11 of the Code of Federal Regulations as follows:

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2005-23075/Airspace Docket No. 05-ASO-12.” The postcard will be date/time stamped and returned to the commenter. All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov or the Superintendent of Document's Web page at http://www.access.gpo.gov/nara. Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to part 71 of the Federal Aviation Regulations (14 CFR part 71) to establish Class E airspace at Nicholasville, KY. Class E airspace designations for airspace areas extending upward from 700 feet or more above the surface of the earth are published in Paragraph 6005 of FAA Order 7400.9N, dated September 1, 2005, and effective September 16, 2005, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document would be published subsequently in the Order.

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

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

The Department of Transportation requires generally that in advertisements of air transportation, the price advertised must be the full price that the consumer will pay. Our Statements of General Policy, codified in 14 CFR part 399, include a rule on price advertising adopted by our predecessor agency, the Civil Aeronautics Board, in December of 1984. The rule states that the Department considers any advertisement of passenger air transportation, a tour, or a tour component that states a price that is not the entire price the consumer must pay to be an unfair or deceptive practice. Our rules governing public charters, codified in 14 CFR part 380, contain an analogous requirement for charter air transportation.

Both rules were adopted pursuant to 49 U.S.C. section 41712 (formerly section 411 of the Federal Aviation Act), which empowers the Department to prohibit unfair and deceptive practices and unfair methods of competition in air transportation and its sale. Specifically, this provision provides among other things that the Department may investigate and decide whether an air carrier, foreign air carrier, or ticket agent is or has been engaging in an unfair or deceptive practice or an unfair method of competition in air transportation or its sale and that if, after notice and an opportunity for a hearing, the Department finds in the affirmative, it may order the offending party to stop the conduct at issue. Violations of regulations adopted pursuant to section 41712 are also violations of the statute itself and may incur civil penalties, see 49 U.S.C. 46301(a)(7).

Air transportation is unlike other industries in that we have the sole authority to regulate airlines' fare advertisements by prohibiting practices that are unfair or deceptive. (Two other Federal agencies enforce provisions relating to airline fare advertising, but these regulations do not bear on unfair or deceptive practices. First, under Department of Homeland Security regulations, carriers must specifically identify the Transportation Security Administration's $2.50 security service fee as the “September 11th Security Fee” in fare advertisements, 49 CFR 1510.7.

Second, the Internal Revenue Service enforces a tax-code provision that imposes restrictions on the display of taxes in fare advertisements, 26 U.S.C. 7275.) Congress modeled section 41712 on section 5 of the Federal Trade Commission (FTC) Act, 15 U.S.C.A. section 45, but by its own terms, that statute cannot be enforced against “air carriers and foreign air carriers,” 15 U.S.C. section 45(a)(2). The States are preempted from regulating in this area (49 U.S.C. 41713, see Morales v. Trans World Airlines , 504 U.S. 374, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992)). Thus, unlike advertising in other industries, where either the States or the FTC, or both, can take action against abusive practices, if we do not exercise our authority, consumers and competitors have no governmental recourse against advertising that is unfair or deceptive. We do not believe, moreover, that 49 U.S.C. section 41712 gives rise to a private right of action, see Love v. Delta Air Lines , 310 F.3d 1347 (11th Cir. 2002), Boswell v. Skywest Airlines , Inc., 361 F.3d 1263 (10th Cir. 2004); see also Alexander v. Sandoval 532 U.S. 275, 286, 121 S.Ct. 1511, 149 L.Ed.2d 517 (2001).

For many years, as a matter of enforcement policy, we have allowed limited exceptions to the general rule that fare advertisements must state the entire price of the advertised air transportation or tour. Specifically, as a matter of prosecutorial discretion, the Department does not take enforcement action against any advertisement that omits government-imposed fees, taxes, and other charges from the quoted fare, provided that such charges are collected on a per-passenger basis and are not ad valorem in nature, and provided also that the advertisement shows the existence and amount of these charges clearly so that consumers can readily determine the total fare. See, e.g., Notice of the Assistant General Counsel for Aviation Enforcement and Proceedings, “Prohibition on Deceptive Practices in the Marketing of Airfare[s] to the Public Using the Internet,” http://airconsumer.ost.dot.gov/rules/20010118.htm (January 18, 2001); Order 2001-12-1 (December 3, 2001); Order 88-8-2 (August 2, 1988). We originally allowed the separate listing of charges that are approved by a government in addition to those that are government-imposed, but recently the Enforcement Office eliminated the exception for the former, reasoning as follows:

Notice of the Assistant General Counsel for Aviation Enforcement and Proceedings, “Disclosure of Higher Prices for Airfares Purchased over the Telephone via Airline Telephone Reservation Centers or at Airline Ticket Counters, and Surcharges That May Be Listed Separately in Fare Advertisements,” http://airconsumer.ost.dot.gov/rules/index.htm (November 5, 2004).

The history of our enforcement policy begins at the end of 1984, when the Civil Aeronautics Board adopted § 399.84 to address the widespread practice of advertising attractive fares and featuring “add-on” costs much less prominently. The Board found that this practice misled and deceived consumers and made price comparison difficult. See Civil Aeronautics Board, 14 CFR part 380 [Special Regulations; Amendment No. 18 to Part 380; Docket 41184; Regulation SPR-195], Public Charters, Final Rule , 49 FR 49438-49440 (December 20, 1984), and 14 CFR part 399 [Policy Statements; Amendment No. 88 to Part 399; Docket 41184-PS-113], Statements of General Policy, Final Rule , 49 FR 49440 (December 20, 1984). Barely one year later, after this Department succeeded to the CAB's jurisdiction in this area, we granted an industry-wide exemption from § 399.84 and § 380.30 to allow exclusion of the U.S. international departure tax from the advertised price, provided that the amount of this tax was clearly stated elsewhere in the advertisement. To reach this result, we balanced the air carriers' asserted need for greater flexibility in advertising against the traveling public's need to know all charges they must pay for air services. Order 85-12-68 (December 24, 1985). We later broadened this exemption to include other per-passenger government fees by Order 88-3-25 (March 10, 1988), once again taking both the needs of the carriers and the imperative that consumers know the total cost of air transportation services into account. We clarified this amendment by Order 88-8-2 (August 2, 1988), where we recognized that consumers can benefit from knowing what portion of their fare is passed on to government entities and what portion retained by the carrier, as long as they can easily determine what the total fare will be. Although the U.S. Court of Appeals struck down the latter two decisions on procedural grounds in Alaska v. Skinner , 868 F2d. 441 (D.C. Cir. 1989), our Enforcement Office has continued to base its discretionary enforcement policy on their substance.

Recently, with fuel costs both rising significantly in the past year and surging in the wake of Hurricane Katrina, the Air Transport Association of America (ATA) informally requested relief from § 399.84 to allow its air-carrier members to list fuel surcharges separately in the manner of government-imposed charges. Our Enforcement Office has consistently taken the position, however, that while nothing in § 41712 or § 399.84 precludes carriers from stating in advertisements that fares include a fuel surcharge and specifying the amount, fuel surcharges must be included in the advertised fare in order to avoid confusing or deceiving consumers. See, e.g., Notice of the Assistant General Counsel for Aviation Enforcement and Proceedings, “Prohibition on Deceptive Practices in the Marketing of Airfare to the Public Using the Internet,” http://airconsumer.ost.dot.gov/rules/20010118.htm (January 18, 2001). (All of the Enforcement Office's notices and industry letters may be found at http://airconsumer.ost.dot.gov/rules/guidance.htm. ) Although the Secretary has denied ATA's fuel surcharge request, with the passage of over twenty years since the adoption of § 399.84, and with the extensive and intensive changes in both marketing and consumer sophistication that the revolution in electronic communications has fostered, we have decided that the time has come to reconsider our full-fare advertising rule in light of current conditions.

We are therefore proposing four alternative approaches to the regulation of airline price advertising and inviting interested persons to comment on these proposals and reasonable alternatives. The first option is to leave current enforcement policy unchanged, either with or without codifying it explicitly in § 399.84. The second option is to enforce the rule as written by ending the exceptions we have long allowed for government-imposed fees, taxes, and charges. Thus, any price advertised for air transportation would have to be the total fare that the consumer would pay. The third option is to amend the policy statement so as to do away with most of our existing requirements for fare advertising and mostly rely on the language of 49 U.S.C. 41712. We are proposing two alternative approaches for the third option: one, a rule that requires only that the total price of any air transportation be disclosed to the consumer before any purchase is transacted, and two, a rule that requires both this and also that any fare advertisement set forth all elements of the fare so that consumers can add them together to determine the total price. This latter option is consistent with the general approach to advertising taken by the FTC—namely, that an advertisement is deceptive if it contains a representation or omission that is likely to mislead consumers acting reasonably in the circumstances and is material to the consumer's decision to buy the advertised product or service, see FTC Policy Statement on Deception (October 14, 1983), http://www.ftc.gov/bcp/policystmt/ad-decept.htm . Under either approach of this third option, while we would no longer routinely take enforcement action against advertisers that list fuel surcharges and other cost elements not imposed by governments separately from the fare, we would retain the power under section 41712 to take enforcement action whenever advertisements constitute unfair or deceptive practices or unfair methods of competition. The fourth option is to eliminate the full fare advertising rule in its entirety, leaving any fare advertising enforcement action to be undertaken solely under section 41712.

We invite interested persons to comment on all four proposals. In addition, we invite comments on whether we should amend § 380.30, our rule on price advertising in charter solicitation materials, in light of developments over the past two decades and, if so, how. We can issue a Notice of Proposed Rulemaking to amend § 380.30 if the comments so warrant. The comments we receive on our proposals for § 399.84 should help us determine which of them now strikes the most appropriate balance between the public interest in preventing consumer deception and the public interest in allowing the market to function efficiently.

This proposal would maintain current enforcement practice and Department case precedent regarding full-fare advertising. One approach would be to amend the rule to incorporate all elements of this practice. Our advertising enforcement precedents under 49 U.S.C. section 41712 that relate only tangentially to full-fare advertising— e.g. , the requirement that a reasonable number of seats be available at advertised prices and disclosure requirements for “percentage off” advertisements and for when seats at an advertised fare are limited and/or not available on all flights—would not be incorporated in the amended 14 CFR 399.84. In addition, the amended rule would not incorporate our policy of allowing Internet travel agents to list their service fees separately from advertised airfares under certain limited conditions ( see Notice of the Assistant General Counsel for Aviation Enforcement and Proceedings, “Revised Enforcement Policy on Deceptive Practices Regarding Service Fees Charged by Travel Agents in the Marketing and Sale of Airfares to the Public via the Internet,” http://airconsumer.ost.dot.gov/rules/20011219.htm (December 19, 2001) and Order 2001-12-7 (December 7, 2001)), because this exception is very narrow and we are not aware of its being used. Thus, the following exceptions and clarifications would be added to the existing text of the rule:

• Government-imposed taxes and fees that the carrier collects on a per-passenger basis may be excluded from the advertised fare, provided that they are not ad valorem in nature, and provided that the advertisement shows the existence and amount of these charges clearly so that consumers can easily determine the total fare. An indication of the existence of the taxes and fees listed separately must be situated close to the advertised fare, and the information provided must be easily readable.

• In advertisements where multiple destinations are listed and not all entail the same government-imposed charges, the advertisement may state a maximum fee, a fee for each destination, or a range of fees. Also, the word “approximately” or a range of amounts may be used to account for minor currency-exchange fluctuations.

• Advertising “two-for-one” fares is deceptive if the fare that must be purchased to take advantage of the promotion is higher than the carrier's other fares in the same market, unless this fact is prominently and clearly disclosed.

• Advertisements of each-way fares that are available only when bought for round-trip travel must disclose the round-trip purchase requirement clearly and conspicuously— i.e. , the disclosure must be prominent and proximate to the advertised fares. A banner or pop-up internet advertisement of an each-way fare that is only available with a round-trip purchase must disclose this fact in the advertisement itself.

• In internet fare advertisements, including not only web sites but also banner, pop-up, and e-mail advertisements, the per-person government charges that may be listed separately may be noted by a prominent hyperlink, proximate to the listed fare, that takes the viewer to a display showing the nature and amount of these charges.

• In advertisements of “free” air transportation in conjunction with the purchase of one or more other tickets, restrictions, fees, and other conditions that apply to the “free” transportation must be noted prominently and proximate to the offer, at a minimum through an asterisk or other symbol directing the reader's attention to the information elsewhere in the advertisement. The information must be presented in easily readable print. This requirement applies to advertisements in all media: the internet, billboards, television, radio, and print media.

• Advertisements of fares that are higher if purchased by telephone or in person than over the Internet must prominently disclose that the stated fares are only available over the Internet. The advertisements must also disclose that tickets cost more than the advertised price if purchased by telephone or in person, and they may disclose the price increment. If the advertisements state a price differential, they may not characterize this amount as a “service fee.”

• In any billboard advertisement that breaks out taxes and fees, a sum of the taxes and fees must be legible to drivers passing the billboard at the posted speed limit.

• In television advertisements, the sum of any taxes and fees that are broken out must be disclosed. It may be presented on screen in a readable manner or disclosed audially.

• Radio advertisements must include the sum of any taxes and fees that are broken out.

We invite comments on whether any of the Department's other enforcement policies on fare advertising should be included in the expanded rule.

This first approach would codify the Enforcement Office's long-standing practice. The Enforcement Office has acted aggressively to ensure that airlines and travel agents comply with 14 CFR 399.84 and the refinements set forth above. It has, for example, issued numerous formal and informal warnings in response to advertisements that did not comply with the Department's advertising requirements. Also, as a result of the Enforcement Office's investigations, the Department has issued 86 cease-and-desist orders concerning violations of 14 CFR 399.84, as enforced, and has assessed a total of $2.26 million in civil penalties in these orders.

We can identify a number of advantages in continuing this practice and codifying it. First, it enables consumers to determine the maximum fare being advertised with ease: they need only add the broken-out charges to the advertised fare. Second, breaking out government-imposed taxes and fees lets consumers know for the most part how much of their fares go to government entities and how much to the carrier. (Our enforcement policy prohibits separate listing of the 7.5 percent Federal excise tax or any other ad valorem tax due to the potential for consumer confusion.) Third, our practice ensures that consumers are protected from hidden surcharges, many of which are entirely under the seller's control. Fourth, while we recognize that the internet affords consumers an unprecedented level of highly detailed information on prices for air transportation, we also recognize both that not all consumers have access to the internet and that those who do not tend to travel less frequently and be less familiar with airline pricing practices than those who do. We are concerned that either allowing advertisements with additional per-person or ad valorem “add-ons” or allowing advertisements that do not include all elements of the fare could increase the risk of consumers not being able to determine the actual fares or of their buying tickets at higher prices than necessary. Fifth, our disclosure requirements promote competition in air transportation, both by facilitating price comparison by consumers and in another respect. We are concerned, for example, that a carrier that has succeeded in hedging its fuel costs might be deprived of the competitive advantage its lower costs should confer if its higher-cost competitors list fuel surcharges separately and thus advertise fares that appear to match or undercut those of their lower-cost rival. Sixth, sellers might prefer the greater certainty of a detailed codified rule to the lesser certainty of a discretionary enforcement policy that currently allows exemptions to the rule but could easily be changed. Seventh, as noted above, unlike price advertising in other industries, the States and the FTC are barred from regulating airline advertising. Curtailment of our traditional role would thus create a vacuum of regulation.

We can also identify disadvantages in continuing and codifying our long-standing practice. First, the fast pace of change in the marketing of air transportation due to evolving technologies has made it increasingly difficult for us to keep our price-advertising requirements current. Codification of all elements of our policy will make future refinements even more difficult and time-consuming. Second, even under the current practice, some sellers advertise a full price while others exclude taxes. This variation makes it more difficult for consumers to compare prices. Third, we are aware that many sellers of air transportation believe our requirements to be unnecessary or unduly restrictive or burdensome, especially given the plethora of price information available on the internet and the ease of using that source to find and compare airfares. These sellers take the position that relaxing or eliminating our full-fare advertising requirements will clear the way for better marketing innovations and increases in efficiency that may in turn mean lower prices for consumers. Fourth, our advertising requirements are not consistent with requirements applicable to other industries, as is discussed below in connection with the third option.

An alternate approach to maintaining our long-standing enforcement practice would be to do so without change to the language of § 399.84. Since enforcement is by nature discretionary, this alternate approach has the advantage of retaining our flexibility to make further refinements to our enforcement policy without the delays associated with rulemaking. Some might argue that this approach has a corresponding disadvantage in that codifying all elements of our enforcement policy in the CFR will make the policy as a whole more accessible to sellers and consumers of air transportation. Given, however, both that (1) sellers and lawyers practicing in this area are already familiar with the policy and the relevant case precedent and that (2) all of this information is readily available on-line at http://airconsumer.ost.dot.gov/rules/guidance.htm , as noted above, this disadvantage may be marginal at best.

We invite commenters to address both whether and to what extent consumers continue to need the level of protection that our disclosure requirements afford them and how these requirements affect competition in air transportation.

This proposal would change current practice by requiring that all advertised fares include all price components. No longer could government-imposed per-passenger charges be broken out and listed separately. While we recognize that crafting an advertisement or display that includes all government-imposed charges in the listed fares may not be possible given that the applicability of some charges varies with the routing chosen, we would consider an advertisement to be in compliance with § 399.84 if it either set forth a range of prices for each city-pair— i.e., the minimum and maximum—or used the word “from” along with the minimum price. This approach would have the virtue of simplicity, and it would ensure uniformity of fare advertisements and thus facilitate price comparison by consumers to the greatest extent. Nevertheless, unless sellers were to continue to list government-imposed charges separately despite being required to include these charges in the advertised fare, which we deem unlikely, this approach would deprive passengers of potentially useful information concerning the composition of airfares. It would also deprive sellers of flexibility that they have long enjoyed. Some Internet sellers of air transportation might incur minimal costs for reprogramming their displays to include government charges, but not all of them would: many already display total fares. We invite commenters to address the advantages and disadvantages of this approach.

This proposal would reverse over twenty years of enforcement practice and eliminate virtually all of our traditional full-fare advertising requirements. In their place we would adopt either (1) a rule requiring that in any sale of air transportation the seller must inform the consumer of the total price before the purchase is transacted or (2) a rule requiring both this and that fare advertisements contain all information necessary to enable consumers to calculate total fares. Advertisements could not feature airline-imposed security charges under either approach, because the Department of Homeland Security prohibits airlines from collecting surcharges for their own security costs, see 49 CFR 1510.9(d).

A rule requiring simply that sellers inform consumers of the total price before the purchase is made has a number of advantages. First, it would allow the entire content of fare advertisements to be determined by the competitive marketplace. The FTC, which has authority to prohibit unfair and deceptive practices and unfair methods of competition in other industries, does not have any express price regulations comparable to our full-fare advertising requirements. Car-rental companies, for example, are thus under no Federal obligation to inform consumers in advertisements of the total price they will have to pay, but we have nevertheless observed a trend among Web sites to give total prices for rental cars when giving quotes for dates the consumer has entered. Another feature of Internet commerce in other industries is that consumers who compare base prices among various Web sites can see that some sites show low base prices but actually charge higher total prices when shipping costs are included. This transparency can result in competition over shipping rates as well as base prices, all to consumers' benefit. When sellers have this level of flexibility, consumers must take greater care in comparing prices before hitting the “buy” button, but as long as consumers know the total price of air travel before they commit themselves to buying it, this approach would merely align the purchase of air transportation with the experience of purchasing most other goods and services on line. Second, this approach would eliminate the difficulties that we face in keeping our enforcement policy current in an era of constant technological flux. Third, if consumers and competitors alike no longer need the level of protection that our requirements have provided, then this approach would clear the way for innovations that could benefit either or both. The Internet now gives those consumers who use it a vast amount of information about prices for air transportation and makes comparing prices fast and easy. (According to the U.S. Department of Commerce, as of October of 2003, 54.6 percent of U.S. households had Internet connections [ See A Nation Online: Entering the Broadband Age, U.S. Department of Commerce, Economics and Statistics Administration, National Telecommunications and Information Administration, September 2004]. Also, with the proliferation of computers in public libraries, even those who do not own computers or have internet connections at home can gain access to the Internet.) Moreover, on-line consumers can now take advantage of so-called “meta” search sites ( e.g. , sidestep.com and kayak.com) that gather price information by “scraping” other Web sites and display a greater variation in prices than can be found elsewhere. Southwest, Delta, AirTran, and Jet Blue are now making 59 percent, 28 percent, 65 percent, and nearly 100 percent of their sales, respectively, through their own Web sites ( Airline Business, June 2005 and November 2004), and consumers also buy air transportation through on-line travel agencies such as Expedia, Orbitz, Priceline, and Travelocity. Fourth, this approach would not preclude us from taking action under section 41712 against advertisers that engage in unfair or deceptive practices or unfair methods of competition. Advertising practices long held to be deceptive, such as “bait and switch,” for example, would still be subject to enforcement action. The FTC has regulations for bait advertising (16 CFR part 238), deceptive pricing (16 CFR part 233), and use of the word “free” and similar representations (16 CFR part 251) as well as policy statements on deception ( http://www.ftc.gov/bcp/policystmt/ad-decept.htm ) and unfairness ( http://www.ftc.gov/bcp/policystmt/ad-unfair.htm ). We anticipate that we would look to precedent under these regulations and under 15 U.S.C.A. 45 for guidance in determining whether advertisements that comply with the amended § 399.84 may nevertheless be unfair or deceptive within the meaning of section 41712.

This approach also has disadvantages. First, we are concerned that if we eliminate all requirements except that the consumer be told the total price before the purchase is transacted, some sellers of air transportation will begin publishing print advertisements that highlight absurdly low fares but disclose none of the taxes, fees, or surcharges that apply. Not all consumers have easy access to the Internet (In October of 2003, according to the Department of Commerce, 45.4 percent of U.S. households did not have Internet connections. [ See A Nation Online: Entering the Broadband Age, supra ]), and many still rely on print advertisements. These consumers would have to make telephone calls to learn the total price and might well be subject to long waits for a live agent. Moreover, some might view such advertisements as examples of “bait and switch.” We invite commenters to address the likelihood of this type of advertising and whether and to what extent it would harm consumers. We specifically invite those sellers that already display or otherwise advertise total fares to comment on whether and how they would change their practices if we adopt this option. Second, we recognize that the positive trends we have observed in car-rental advertisements on the Internet may reflect government initiatives taken at the State level. As noted above, the States are preempted from regulating airline advertising practices. We encourage commenters to address the extent to which a simple requirement that airlines inform customers of the total fare before selling the ticket might leave consumers uniquely vulnerable. Unlike consumers in other industries, consumers of air transportation would not be able to appeal for protection to the States, a circumstance that many believe justifies Department requirements that go beyond FTC requirements for advertising in other industries. Third, enforcement action against abusive advertising practices is likely to be considerably more costly and time-consuming for all parties than it is now. Fare advertising is commercial speech, which, the Supreme Court has held, enjoys certain protections under the First Amendment. See Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980), 100 S.Ct. 2343. The Court said in that case that “the government may ban forms of communication more likely to deceive the public than to inform it” (citation omitted). Id , at 563. Thus, in reviewing an advertisement for compliance with § 41712, we must consider both the advertisement itself and its effect on an ordinary consumer to determine if it is unfair or deceptive. Country Tweeds, Inc. v. FTC, 326 F.2d 144, 148 (2nd Cir. 1964), Order 86-8-4. “The important criterion is the net impression which the advertisement is likely to make upon the general populace, Eastern Air Lines, Inc. v. National Airlines Enforcement Proceeding, 33 CAB 436, 464 (1969), quoting Charles of the Ritz Dist. Corp. v. FTC, 143 F.2d 676, 679 (2nd Cir. 1944). The “likelihood of deception or the capacity to deceive” has been held to be the standard for judging whether an advertisement is deceptive in violation of the law. Montgomery Ward and Co. v. FTC, 379 F.2d 666, 670 (7th Cir. 1967), CAB Order 82-7-107. Under these formulations of the government's burden, enforcement of section 41712 against fare advertising would be more cumbersome without § 399.84 as it is currently construed, both because there would be more elements of proof and because issues would have to be decided on a case-by-case basis.

The first concern stated above will not arise if we amend § 399.84 to require that fare advertisements set forth all elements of the fare so that consumers can add them together to determine the total price. Under this approach, sellers could exclude any fees and surcharges from the advertised fares, but the advertisement would still have to disclose all excluded price elements as well as their amounts. This approach would most closely approximate the policy followed by the FTC, as noted above. It would still leave sellers free, however, to advertise absurdly low fares in bold, large print and relegate large carrier-imposed surcharges to the fine print, a practice some might deem unfair and misleading.

We invite commenters to address each approach of this third option and to point out any other advantages or drawbacks that they perceive. Among other things, commenters may want to address the following: (1) The implications for both consumers and competition of there being no requirement that sellers use a consistent approach to advertising fares— i.e., the same base fare with the same cost elements broken out—across all media— i.e., Web sites, print advertisements, and broadcast advertisements, and (2) whether carriers are likely to break out booking or service fees from the base fare in order to make their offerings appear as attractive as those of travel agents, many of which now charge such fees, and if so, whether this will harm consumers.

The advantages and disadvantages of removing § 399.84 are similar to those of the first approach under Option III above, except that without an explicit rule requiring sellers to inform consumers of the total price of their transportation before purchases are consummated, consumers would have less regulatory protection. We invite interested persons to comment on whether an express disclosure requirement is necessary in light of (1) the potential for enforcement action under section 41712 against sellers that engage in practices that deceive or confuse consumers and (2) consumers' ability to bring contract actions against sellers that charge them prices to which they have not agreed. We invite comments on any other advantages or disadvantages of this option.

As noted above, § 399.84 has a counterpart in our charter regulations, § 380.30. While we are not proposing any specific changes to the latter rule here, we do invite interested persons to comment on whether and how current conditions may warrant its revision as well. We can issue a Notice of Proposed Rulemaking to revise the rule if appropriate.

Anyone is able to search the electronic form of all 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 DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70, Pages 19477-78) or you may visit http://dms.dot.gov.

The Department has determined that any of several of the options proposed for amending the existing rule, if adopted as a final rule, would be a significant regulatory action under Executive Order 12866 and under the Department's Regulatory Policies and Procedures. None of the proposed rules would require the disclosure of any information in addition to what is required under application of the existing rule, and the Department expects that adoption of any of the proposed rules will not significantly affect the regulatory burdens or benefits associated with the current rule. Therefore, this proposal is expected to have a minimal economic effect, and further regulatory evaluation is not necessary.

This NPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”). The Department has determined that this proposal would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, that it would not impose substantial direct compliance costs on State and local governments, and that it would not preempt State law. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.

This NPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13084 (“Consultation and Coordination with Indian Tribal Governments”). Because any of the proposed amendments, if adopted, would not significantly or uniquely affect the Indian tribal communities and would not impose substantial direct compliance costs, the funding and consultation requirements of the Executive Order do not apply.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires an agency to review regulations to assess their impact on small entities unless the agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities. I hereby certify that any of these proposed amendments, if adopted, would not have a significant economic impact on a substantial number of small entities. None of the proposed amendments would increase the regulatory burden on air carriers and ticket agents substantially. The Department seeks comment on whether there are small entity impacts that should be considered.

None of the proposed amendments contains information collection requirements that require approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 2507 et seq. )

The Department has determined that the requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply to this rulemaking.

For the reasons set forth in the preamble, the Department proposes to amend 14 CFR part 399 as follows:

Notice of this meeting is provided in accordance with Sections 10(a) and (b) of the Federal Advisory Committee Act (5 U.S.C. App.2) and 41 CFR 102-3.150. The Manufactured Housing Consensus Committee was established under Section 604(a)(3) of the National Manufactured Housing Construction and Safety Standards Act of 1974, as amended, 42 U.S.C. 5403(a)(3). The Committee is charged with providing recommendations to the Secretary to adopt, revise, and interpret manufactured home construction and safety standards and procedural and enforcement regulations, and with developing and recommending proposed model installation standards to the Secretary.

The purpose of this conference call meeting is to permit the Committee, at its request, to review and make further recommendations to the Secretary regarding proposed changes to 24 CFR 3282.401 through 3282.418 (Subpart I—Consumer Complaint Handling and Remedial Actions), and the proposed Model Manufactured Home Installation Standards. The exceptional circumstances providing less than 15 calendar days notice of the meeting are that it is necessary to have this meeting on this date, which has been proposed and agreed to by the Committee, to permit the Committee to continue its consideration and take action regarding the foregoing matters in a timely manner.

A. Roll Call.

B. Welcome and Opening remarks.

C. Full Committee meeting and take actions on proposed changes to 24 CFR part 3282, subpart I, and the proposed Model Manufactured Home Installation Standards.

D. Adjournment.

The notice of proposed rulemaking and notice of public hearing that appeared in the Federal Register on Monday, September 19, 2005 (70 FR 54859), announced that a public hearing was scheduled for Thursday, December 15, 2005, at 10 a.m. in the IRS Auditorium, Internal Revenue Service Building, 1111 Constitution Avenue, NW., Washington, DC. The subject of the public hearing is proposed regulations under section 863 of the Internal Revenue Code. The public comment period for these proposed regulations expired on Wednesday, November 23, 2005. Outlines of oral comments were due on Wednesday, November 23, 2005.

The notice of proposed rulemaking and notice of public hearing, instructed those interested in testifying at the public hearing to submit outlines of the topics to be addressed. As of Wednesday, December 7, 2005, no one has requested to speak. Therefore, the public hearing scheduled for Thursday, December 15, 2005, is cancelled.

The Institute of Museum and Library Services Congress proposes to remove outdated regulations and make minor technical amendments to reflect Congress' reauthorization of the Institute of Museum and Library Services with The Museum and Library Services Act of 2003, Public Law 108-81 (September 25, 2003). These revisions are meant to fulfill the Institute's responsibility to its eligible grant applicants by ensuring that all regulations, policies, and procedures are up-to-date. The regulations proposed for removal include regulations relating to programs and requirements no longer in existence at the Institute as a result of both agency practice and The Museum and Library Services Act of 2003. In the interests of economy of administration, and because all of the regulations proposed to be removed are outdated and the technical amendments are minor, they are included in one rulemaking vehicle.

Comments should be submitted in writing to the address indicated in the ADDRESSES section of this document. All comments received will be available upon request for public inspection at the Institute of Museum and Library Services, 1800 M Street, NW., Ninth Floor, Washington, DC 20036. All written comments received by the date included in the DATES section of this document and all other relevant information in the record will be carefully assessed and fully considered prior to implementation of the final rule. Any information considered to be confidential must be so identified and submitted in writing. We will not consider comments submitted anonymously. However, if you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment.

The regulatory removal in this proposed rulemaking eliminates outdated regulations and makes technical amendments to reflect Congress' reauthorization of the Institute of Museum and Library Services under The Museum and Library Services Act of 2003 Public Law 108-81 (September 25, 2003). These changes will ensure that all regulations governing provision of grants made by the Institute are consistent with current statutory guidance and agency practice. The proposed amendments also reorganize certain sections in 45 CFR Part 1180 to provide greater clarity for agency applicants and grantees. The public is invited to make substantive comment on any of the changes in the proposed rule.

Under Executive Order 12866, the Institute must determine whether the regulatory action is “significant” and therefore subject to OMB review and the requirements of the Executive Order. The Order defines a “significant regulatory action” as one that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interface with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The proposed rule removes a number of outdated regulations and makes technical amendments to reflect Congress' reauthorization of the Institute of Museum and Library Services under The Museum and Library Services Act of 2003, Public Law 108-81 (September 25, 2003). As such, it does not impose a compliance burden on the economy genrerally or on any person or entity. Accordingly, this rule is not a “significant regulatory action” from an economic standpoint, and it does not otherwise create any inconsistencies or budgetary impacts to any other agency or Federal Program.

Because this proposed rule would remove outdated regulations and make certain technical amendments, the Institute has determined in Regulatory Flexibility Act (5 U.S.C. 601 et seq.) review that this proposed rule will not have a significant economic impact on a substantial number of small entities because it simply makes technical amendments and removes outdated regulations.

This proposed rule is exempt from the requirements of the Paperwork Reduction Act, since it removes existing outdated regulations and makes only technical amendments to reflect Congress' reauthorization of the Institute of Museum and Library Services under The Museum and Library Services Act of 2003, Public Law 108-81 (September 25, 2003). An OMB form 83-1 is not required.

For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. chapter 25, subchapter II), this proposed rule will not significantly or uniquely affect small governments and will not result in increased expenditures by State, local, and tribal governments, or by the private sector, of 4100 million or more as adjusted for inflation) in any one year.

This proposed rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. The proposed rule:

a. Does not have an annual effect on the economy of $100 million or more.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

c. 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

In accordance with Executive Order 12630, the proposed rule does not have significant takings implications. No rights, property or compensation has been, or will be, taken. a takings implication assessment is not required.

In accordance with Executive Order 13132, this proposed rule does not have federalism implications that warrant the preparation of a federalism assessment.

In accordance with Executive Order 12988, the Institute has determined that this proposed rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order.

In accordance with Executive Order 13175, the Institute has evaluated this proposed rule and determined that it has no potential negative effects on federally recognized Indian tribes.

This proposed rule does not constitute a major Federal action significantly affecting the quality of the human environment.

For the reasons stated in the preamble and under the authority of 20 U.S.C. 9101 et seq., the Institute of Museum and Library Services proposes to amend 45 CFR Part 1180 as follows:

This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 05-316, adopted November 23, 2005 and released November 25, 2005. The full text of this Commission decision is available for inspection and copying during regular business hours in the FCC's Reference Information Center at Portals II, 445 12th Street, SW., CY-A257, Washington, DC 20554. This document may also be purchased from the Commission's duplicating contractors, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-378-3160 or http://www.BCPIWEB.com. This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506 (C)(4). The provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding.

Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, See 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR Part 73 as follows:

This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM) , FCC 05-189, adopted on November 3, 2005, and released on November 18, 2005. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, SW., CY-A257, Washington, DC 20554. These documents will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete text may be purchased from the Commission's copy contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

This NPRM does not contain proposed information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

1. In this Notice of Proposed Rulemaking ( NPRM ), the Commission seeks comment on how to implement section 621(a)(1) of the Communications Act of 1934, as amended (the Communications Act or the Act). Section 621(a)(1) states in relevant part that “a franchising authority * * * may not unreasonably refuse to award an additional competitive franchise.” While the Commission has found that, “[t]oday, almost all consumers have the choice between over-the-air broadcast television, a cable service, and at least two DBS providers,” greater competition in the market for the delivery of multichannel video programming is one of the primary goals of federal communications policy. Increased competition can be expected to lead to lower prices and more choices for consumers and, as marketplace competition disciplines competitors' behavior, all competing cable service providers could require less federal regulation. Moreover, for all competitors in the marketplace, the abilities to offer video to consumers and to deploy broadband networks rapidly are linked intrinsically. Specifically, the construction of modern telecommunications facilities requires substantial capital investment, and such networks, once completed, are capable of providing not only voice and data, but video as well. As a consequence, the ability to offer video offers the promise of an additional revenue stream from which deployment costs can be recovered. However, potential competitors seeking to enter the MVPD marketplace have alleged that in many areas the current operation of the local franchising process serves as a barrier to entry. Accordingly, this NPRM is designed to solicit comment on implementation of section 621(a)(1)'s directive that LFAs not unreasonably refuse to award competitive franchises, and whether the franchising process unreasonably impedes the achievement of the interrelated federal goals of enhanced cable competition and accelerated broadband deployment and, if so, how the Commission should act to address that problem.

2. The Communications Act provides new entrants four options for entry into the MVPD market. They can provide video programming to subscribers via radio communication, a cable system or an open video system, or they can provide transmission of video programming on a common carrier basis. Any new entrant opting to offer “cable service” as a “cable operator” becomes subject to the requirements of Title VI of the Communications Act ( See 47 U.S.C. 542(6); 47 U.S.C. 542(5)). Section 621 of Title VI sets forth general cable franchise requirements. Subsection (b)(1) of section 621 prohibits a cable operator from providing cable service in a particular area without first obtaining a cable franchise, and subsection (a)(1) grants to LFAs the authority to award such franchises. Other provisions of section 621 provide that, in awarding a franchise, an LFA “shall assure that access to cable service is not denied to any group of potential residential cable subscribers because of the income of the residents of the local area in which such group resides” (47 U.S.C. 541(a)(3)); “shall allow [a] cable system a reasonable period of time to become capable of providing cable service to all households in the franchise area” (47 U.S.C. 541(a)(4)(A)); and “may require adequate assurance that the cable operator will provide adequate public, educational and governmental access channel capacity, facilities, or financial support” (47 U.S.C. 541(a)(4)(B)).

3. The initial purpose of section 621(a)(1), which was added to the Communications Act by the Cable Communications Policy Act of 1984 (the 1984 Cable Act), was to both affirm and delineate the role of LFAs in the franchising process ( See, e.g. , H.R. Rep. No. 98-934, at 59 (1984)). A few years later, however, the Commission prepared a report to Congress on the cable industry pursuant to the requirements of the 1984 Cable Act ( See generally Competition, Rate Deregulation and the Commission's Policies Relating to the Provision of Cable Television Service, 55 FR 32631, August 10, 1990) (Report). In that Report, the Commission concluded that in order “[t]o encourage more robust competition in the local video marketplace, the Congress should * * * forbid local franchising authorities from unreasonably denying a franchise to potential competitors who are ready and able to provide service.”

4. In response, Congress revised section 621(a)(1) through the Cable Television Consumer Protection and Competition Act of 1992 (the 1992 Cable Act) to read as follows: “A franchising authority may award, in accordance with the provisions of this title, 1 or more franchises within its jurisdiction; except that a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to award an additional competitive franchise.” (47 U.S.C. 541(a)(1)). As the legislative history makes plain, the purpose of this abridgement of local government authority was to promote greater cable competition:

5. As potential new entrants seek to enter the MVPD marketplace, there have been indications that in many areas the current operation of the local franchising process is serving as an unreasonable barrier to entry. For example, Verizon recently filed comments in the Commission's annual investigation into the state of video competition arguing that “[t]he single biggest obstacle to widespread competition in the video services market is the requirement that a provider obtain an individually negotiated local franchise in each area where it intends to provide service.” In its comments, Verizon contends that the local franchising process impedes cable competition in the following ways: (1) It “forces a new entrant to telegraph its deployment plans to the incumbent video competitor,” thereby “allow[ing] the incumbent not only to take steps to prolong the franchise process and delay the onset of competition, but also to entrench its position in the market before the new entrant has the opportunity to compete;” (2) it “simply takes too long,” as a result of “factors such as inertia, arcane or lengthy application procedures, bureaucracy or, in some cases, inattentiveness or unresponsiveness at the LFA level;” (3) it triggers so-called “level playing field” laws, “which require the new entrant to build-out and serve an entire franchise area on an expedited basis or to match all of the concessions previously provided by the incumbent in order for it to gain its original monopoly position in the local area, despite the vastly different competitive situation facing the new entrant;” and (4) it involves “outrageous demands by some LFAs,” which “are in no way related to video services or to the rationales for requiring franchises.”

6. The efficient operation of the local franchising process is especially significant with respect to potential new entrants with existing facilities, for a number of reasons. First, because they seek to provide video programming to large portions of the country, they contend that the sheer number of franchises they first must obtain serves as a competitive roadblock. Verizon, for example, has stated that it would have to negotiate with more than 10,000 municipalities in order to offer service throughout its current service area. Second, because the existing service areas of potential new entrants with existing facilities do not always coincide perfectly with those covered by incumbent cable operators' franchises, they argue that build-out requirements demanded by LFAs create disincentives for them to enter the marketplace. SBC has told investors that Project Lightspeed, an “initiative to expand its fiber-optics network deeper into neighborhoods to deliver SBC U-verseSM TV, voice and high-speed Internet access services,” will be deployed to approximately ninety percent of its “high-value,” seventy percent of its “medium-value,” and less than five percent of its “low-value” customers.

7. According to the National Association of Telecommunications Officers and Advisors, the National League of Cities, the United States Conference of Mayors, and the National Association of Counties, local governments “want and welcome real communications competition in video, telephone and broadband services,” and they “support a technology-neutral approach that promotes broadband deployment and competitive service offerings.” While acknowledging that consumers “demand real competition to increase their options and improve the quality of services,” local governments argue that franchising “need not be a complex or time-consuming process.” They argue that the current framework “[s]afeguards [a]gainst [a]buse and [p]rotects [c]ompetition.” Furthermore, local governments maintain that local franchisors take their fiduciary responsibilities seriously and strive to “manage and facilitate in an orderly and timely fashion the use of [local] property.”

8. Anecdotal evidence suggests that new entrants have been able to obtain cable franchises. SNET and Ameritech both obtained cable franchises before being acquired by SBC. BellSouth and Qwest have obtained franchises, as have many cable overbuilders—RCN has acquired over 100. Verizon has stated that it “has obtained nine local cable franchises for FiOS TV from various local franchising authorities (LFAs) in California, Florida, Virginia, and Texas” and “is negotiating franchises with more than 200 municipalities.” According to a survey of 161 National Telecommunications Cooperative Association (NTCA) members, “[f]orty-two percent of survey respondents offer video service to their customers. Ninety-four percent of those offer video under a cable franchise, while six percent offer video as an Open Video System (OVS) * * *.”

9. In addition, there have been recent efforts at the state level to facilitate entry by competitive cable providers. For example, legislation was passed in Texas in September 2005 enabling new entrants in the video programming distribution marketplace to provide service pursuant to state-issued certificates of franchising authority. Upon the submission of a completed affidavit by an applicant, Texas regulators now are required to issue a certificate of franchising authority within seventeen business days. Similar bills have been introduced in Virginia and New Jersey although they are yet to be enacted.

10. With this NPRM , the Commission seeks to determine whether, in awarding franchises, LFAs are carrying out legitimate policy objectives allowed by the Communications Act or are hindering the federal communications policy objectives of increased competition in the delivery of video programming and accelerated broadband deployment and, if that is the case, whether and how to remedy the problem.

11. Potential competitive cable providers have alleged that the local franchising process serves as a barrier to entry, and that state and local franchise requirements serve to unreasonably delay competitive entry. Given the interrelated federal goals of enhanced cable competition and rapid broadband deployment, below we seek comment on a number of issues relating to the cable franchising process generally, and, in particular, the process by which competitive cable franchises are awarded.

12. The Commission requests comment on the current environment in which would-be new entrants attempt to obtain competitive cable franchises. How many franchising authorities are there nationally? How many franchises are needed to reach sixty or eighty percent of cable subscribers? In how many of these franchise areas do new entrants provide or intend to provide competitive video services? Are cable systems generally equivalent to franchise areas? To what extent does the regulatory process involved in obtaining franchises—particularly multiple franchises covering broad territories, such as those today served by facilities-based providers of telephone and/or broadband services—impede the realization of the Commission's policy goals? Are potential competitors obtaining from LFAs the authority needed to offer video programming to consumers in a timely manner? What is the impact of state-wide franchise authority on the ability of the competitive provider to access the market? Is there evidence that such state-wide franchises are causing delay? What impact has state-level legislative or regulatory activity had on the franchising process? Are competitors taking advantage of new opportunities provided by state legislatures and regulators? How many competitive franchises have been awarded to date? How many competitive franchises have potential new entrants requested to date? How much time, on average, has elapsed between the date of application and the date of grant, and during that time period, how much time, on average, was spent in active negotiations? How many applications have been denied?

13. How many negotiations currently are ongoing? Are the terms being proffered consistent with the requirements of Title VI? How has the cable marketplace changed since the passage of the 1992 Cable Act, and what effect have those changes had on the process of obtaining a competitive cable franchise? Are current procedures or requirements appropriate for any cable operator, including existing cable operators? What problems have cable incumbents encountered with LFAs? Should cable service requirements vary greatly from jurisdiction to jurisdiction? Are certain cable service requirements no longer needed in light of competition in the MVPD marketplace? To what extent are LFAs demanding concessions that are not relevant to providing cable services? Commenters arguing that such abuses are occurring are asked to provide specific examples of such demands. Parties should submit empirical data on the extent to which LFAs unreasonably refuse to award competitive franchises. The Commission seeks record evidence of both concrete examples and broader information that demonstrate the extent to which any problems exist.

14. The Commission also asks commenters to address the impact that state laws have on the ability of new entrants to obtain competitive franchises. Some parties state that so-called “level-playing-field” statutes, which typically impose upon new entrants terms and conditions that are neither “more favorable” nor “less burdensome” that those to which existing franchises are subject, create unreasonable regulatory barriers to entry. Others state that they create comparability among all providers. The Commission seeks comment on these issues. The Commission also seeks comment on the impact of state laws establishing a multi-step franchising process. Do such laws create unreasonable delays in the franchising process?

15. The Commission tentatively concludes that it has authority to implement section 621(a)(1)'s directive that LFAs not unreasonably refuse to award competitive franchises. As an initial matter, the Commission is charged by Congress with the administration of Title VI, which, as courts have held, necessarily includes the authority to interpret and implement section 621. Moreover, the Commission believes that the 1992 Cable Act's revisions to section 621(a)(1) indicate that Congress considered the goal of greater cable competition to be sufficiently important to justify the Commission's adoption of rules. Under the Supremacy Clause, the enforcement of a state law or regulation may be preempted by federal law when it stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. The Supreme Court has held that federal regulations properly adopted in accordance with an agency's statutory authorization have no less preemptive effect than federal statutes and, applying this principle, the Court has approved the preemptive authority that the Commission has asserted over the regulation of cable television systems. In addition, section 636(c) of the Act states that “any provision of law of any State, political subdivision, or agency thereof, or franchising authority or any provision of any franchise granted by such authority, which is inconsistent with [the Communications] Act shall be deemed to be preempted and superseded.” Thus, the Commission tentatively concludes that, pursuant to the authority granted under sections 621(a) and 636(c) of the Act, and under the Supremacy Clause, the Commission may deem to be preempted and superceded any law or regulation of a State or LFA that causes an unreasonable refusal to award a competitive franchise in contravention of section 621(a). At the same time, however, the Commission recognize that section 636(a) states that “[n]othing in this title shall be construed to affect any authority of any State, political subdivision, or agency thereof, or franchising authority, regarding matters of public health, safety, and welfare, to the extent consistent with the express provisions of this title.” Finally, the Commission notes that it is empowered by section 1 of the Act “to execute and enforce the provisions of this Act” and by section 4(i) “to perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this Act, as may be necessary in the execution of its functions.” The Commission seeks input from commenters on the tentative conclusion that the Commission is authorized to implement section 621(a)(1) as amended. The Commission also seeks comment on the manner in which the Commission should proceed. Do the Commission have the authority to adopt rules or is it limited to providing guidance?

16. The first sentence of section 621(a)(1) states that a franchising authority may award “1 or more franchises” and may not unreasonably refuse to award “an additional competitive franchise.” The Commission tentatively concludes that section 621(a)(1) empowers it to ensure that the local franchising process does not unreasonably interfere with the ability of any potential new entrant to provide video programming to consumers. The Commission seeks comment on this tentative conclusion.

17. Section 621(a)(1) states in relevant part that “[a]ny applicant whose application for a second franchise has been denied by a final decision of the franchising authority may appeal such final decision pursuant to the provisions of section 635 for failure to comply with this subsection.” Section 635, in turn, sets forth the specific procedures for such judicial proceedings. Apart from those remedies available to aggrieved cable operators under section 635, the Commission tentatively concludes that section 621(a)(1) authorizes the Commission to take actions, consistent with section 636(a), to ensure that the local franchising process does not undermine the well-established policy goal of increased MVPD competition and, in particular, greater cable competition within a given franchise territory. The Commission seeks comment on this tentative conclusion as well. How might the Commission best assure that the local franchising process is not inhibiting the ability of incumbent cable operators to invest in broadband services?

18. Finally, the Commission seeks comment on possible sources of Commission authority, other than section 621(a)(1), to address problems caused by the local franchising process. For example, given the relationship between the ability to offer video programming and the willingness to invest in broadband facilities identified above, could the Commission take action to address franchise-related concerns pursuant to section 706?

19. The Commission seeks comment on how to should define what constitutes an unreasonable refusal to award an additional competitive franchise under section 621(a)(1). While that section refers to the “unreasonable refus[al] to award an additional competitive franchise,” the Commission tentatively concludes that section 621(a)(1) prohibits not only the ultimate refusal to award a competitive franchise, but also the establishment of procedures and other requirements that have the effect of unreasonably interfering with the ability of a would-be competitor to obtain a competitive franchise, either by (1) creating unreasonable delays in the process, or (2) imposing unreasonable regulatory roadblocks, such that they effectively constitute a de facto “unreasonable refusal to award an additional competitive franchise” within the meaning of section 621(a)(1). The Commission tentatively finds that this interpretation is consistent with the language in the statute and appropriate because it captures more appropriately the range of behavior that would constitute an “unreasonable refusal to award an additional competitive franchise.” The Commission seeks comment on this tentative conclusion.

20. Further, the Commission tentatively concludes that it is not unreasonable for an LFA, in awarding a franchise, to “assure that access to cable service is not denied to any group of potential residential cable subscribers because of the income of the residents of the local area in which such group resides;” “allow [a] cable system a reasonable period of time to become capable of providing cable service to all households in the franchise area;” and “require adequate assurance that the cable operator will provide adequate public, educational and governmental access channel capacity, facilities, or financial support.” These powers and limitations on franchising authorities promote important public policy goals.

21. The Commission solicits comment on what, if any, specific rules, guidance or best practices should be adopted to ensure that the local cable franchising process does not unreasonably impede competitive cable entry. What would the appropriate remedy or remedies be for violations of such rules, guidance or best practices? Should the Commission establish specific rules to which LFAs must adhere or specific guidelines for LFAs? For example, should the Commission address maximum timeframes for considering an application for a competitive franchise? Are there certain practices that should be found unreasonable through rules or guidelines? If so, what are these practices?

22. In addition, it is not clear how the primary justification for a cable franchise— i.e. , the locality's need to regulate and receive compensation for the use of public rights of way—applies to entities that already have franchises that authorize their use of those rights of way. Does section 621(a)(1) provide the Commission with the authority to establish different—specifically, higher—standards for “reasonableness” with respect to such entities? In that context, the Commission seeks comment on whether section 621(a)(1) permits the imposition of greater restrictions on the authority of LFAs with respect to those entities ( e.g. , facilities-based providers of telephone and/or broadband services) that already have permission to access public rights of way.

23. The Commission also seeks comment on whether build-out requirements are creating unreasonable barriers to entry for facilities-based providers of telephone and/or broadband services. The areas served by such entities frequently do not coincide perfectly with the areas under the jurisdiction of the relevant LFAs. Section 621(a)(4)(A) states that, “[i]n awarding a franchise, the franchising authority shall allow the applicant's cable system a reasonable period of time to become capable of providing cable service to all households in the franchise area.” (For purposes of this discussion, there is a distinction between (1) requirements that may function as barriers to competitive entry for providers of telephone and/or broadband services with existing facilities, and (2) prohibitions against discriminatory deployment of cable services based upon economic considerations.) The Commission seeks comment on the FCC's authority in this area. Given the language of section 621(a)(4)(A), does the Commission have authority under section 621(a)(1) to direct LFAs to allow such new entrants a specific, minimum amount of time to expand their networks beyond their current footprints? If so, and in light of the fact that a new entrant generally faces competition from at least one incumbent cable operator and two direct broadcast satellite (“DBS”) providers, what would constitute a reasonable amount of time to do so?

24. Finally, section 602 of the Act defines “franchising authority” as “any governmental entity empowered by Federal, State, or local law to grant a franchise.” In some cases it may be the state itself, rather than the LFA, that has taken steps which unreasonably interfere with new entrants' ability to obtain a competitive franchise. Commenters should address whether it may be appropriate to preempt such state-level legislation to the extent that the Commission finds it serves as an unreasonable barrier to the grant of competitive franchises.

25. As required by the Regulatory Flexibility Act of 1980, as amended (the RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact of the policies and rules proposed in this NPRM on a substantial number of small entities. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the NPRM provided in paragraph 28 of the item. The Commission will send a copy of the NPRM , including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA) ( See 5 U.S.C. 603(a)).

26. The NPRM initiates a process to implement section 621(a)(1) of the Communications Act in order to further the interrelated goals of enhanced cable competition and accelerated broadband deployment. Specifically, the NPRM solicits comment on how to best ensure that LFAs, which are the governmental entities responsible for regulating cable providers at the local level, do not “unreasonably refuse to award * * * additional competitive franchise[s].” The NPRM also seeks comment on the specific approach the Commission should take in order to implement section 621(a)(1). Specifically, it asks whether the Commission should establish (1) specific guidelines and/or model terms for competitive cable franchises, or (2) general principles that are designed to provide LFAs with the guidance necessary to ensure that competitive franchises are awarded in a timely fashion.

27. The NPRM tentatively concludes that the Commission has authority to implement section 621(a)(1)'s mandate that LFAs do not “unreasonably refuse to award * * * additional competitive franchises.” The item notes that the Commission is empowered by section 1 of the Communications Act “to execute and enforce [its] provisions” and by section 4(i) “to perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this Act, as may be necessary in the execution of its functions.” Finally, the NPRM finds that section 636(c) makes plain that “any provision of law of any State, political subdivision, or agency thereof, or franchising authority or any provision of any franchise granted by such authority, which is inconsistent with this Act shall be deemed to be preempted and superceded.” The NPRM is adopted pursuant to sections 1, 4(i), 621(a)(1), and 636(c) of the Communications Act of 1934, as amended.

28. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).

29. Small Businesses. Nationwide, there are a total of approximately 22.4 million small businesses, according to SBA data.

30. Small Organizations. Nationwide, there are approximately 1.6 million small organizations.

31. The Commission has determined that the group of small entities possibly directly affected by the proposed rules herein, if adopted, consists of small governmental entities (which, in some cases, may be represented in the local franchising process by not-for-profit enterprises). A description of these entities is provided below. In addition the Commission voluntarily provides descriptions of a number of entities that may be merely indirectly affected by any rules that result from the NPRM .

32. The term “small governmental jurisdiction” is defined as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” As of 1997, there were approximately 87,453 governmental jurisdictions in the United States. This number includes 39,044 county governments, municipalities, and townships, of which 37,546 (approximately 96.2 percent) have populations of fewer than 50,000, and of which 1,498 have populations of 50,000 or more. Thus, we estimate the number of small governmental jurisdictions overall to be 84,098 or fewer.

33. The entities described in this section are affected merely indirectly by the NPRM , and therefore are not formally a part of this RFA analysis. They are included, however, to broaden the record in this proceeding and to alert them to the Commission's tentative conclusions.

34. The “Cable and Other Program Distribution” census category includes cable systems operators, closed circuit television services, direct broadcast satellite services, multipoint distribution systems, satellite master antenna systems, and subscription television services. The SBA has developed small business size standard for this census category, which includes all such companies generating $12.5 million or less in revenue annually. According to Census Bureau data for 1997, there were a total of 1,311 firms in this category, total, that had operated for the entire year. Of this total, 1,180 firms had annual receipts of under $10 million and an additional 52 firms had receipts of $10 million or more but less than $25 million. Consequently, the Commission estimates that the majority of providers in this service category are small businesses that may be affected by the rules and policies adopted herein.

35. Cable System Operators (Rate Regulation Standard). The Commission has developed its own small-business-size standard for cable system operators, for purposes of rate regulation. Under the Commission's rules, a “small cable company” is one serving fewer than 400,000 subscribers nationwide. The most recent estimates indicate that there were 1,439 cable operators who qualified as small cable system operators at the end of 1995. Since then, some of those companies may have grown to serve over 400,000 subscribers, and others may have been involved in transactions that caused them to be combined with other cable operators. Consequently, the Commission estimates that there are now fewer than 1,439 small entity cable system operators that may be affected by the rules and policies adopted herein.

36. Cable System Operators (Telecom Act Standard). The Communications Act of 1934, as amended, also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” The Commission has determined that there are 67,700,000 subscribers in the United States. Therefore, an operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Based on available data, the Commission estimates that the number of cable operators serving 677,000 subscribers or fewer, totals 1,450. The Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, and therefore is unable, at this time, to estimate more accurately the number of cable system operators that would qualify as small cable operators under the size standard contained in the Communications Act of 1934.

37. Open Video Services. Open Video Service (OVS) systems provide subscription services. As noted above, the SBA has created a small business size standard for Cable and Other Program Distribution. This standard provides that a small entity is one with $12.5 million or less in annual receipts. The Commission has certified approximately 25 OVS operators to serve 75 areas, and some of these are currently providing service. Affiliates of Residential Communications Network, Inc. (RCN) received approval to operate OVS systems in New York City, Boston, Washington, DC, and other areas. RCN has sufficient revenues to assure that they do not qualify as a small business entity. Little financial information is available for the other entities that are authorized to provide OVS and are not yet operational. Given that some entities authorized to provide OVS service have not yet begun to generate revenues, the Commission concludes that up to 24 OVS operators (those remaining) might qualify as small businesses that may be affected by the rules and policies adopted herein.

38. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard (e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent local exchange carriers are not dominant in their field of operation because any such dominance is not “national” in scope.

39. Incumbent Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 1,303 carriers have reported that they are engaged in the provision of incumbent local exchange services. Of these 1,303 carriers, an estimated 1,020 have 1,500 or fewer employees and 283 have more than 1,500 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by our action. In addition, limited preliminary census data for 2002 indicate that the total number of wired communications carriers increased approximately 34 percent from 1997 to 2002.

40. Competitive Local Exchange Carriers, Competitive Access Providers (CAPs), “Shared-Tenant Service Providers,” and “Other Local Service Providers.” Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 769 carriers have reported that they are engaged in the provision of either competitive access provider services or competitive local exchange carrier services. Of these 769 carriers, an estimated 676 have 1,500 or fewer employees and 93 have more than 1,500 employees. In addition, 12 carriers have reported that they are “Shared-Tenant Service Providers,” and all 12 are estimated to have 1,500 or fewer employees. In addition, 39 carriers have reported that they are “Other Local Service Providers.” Of the 39, an estimated 38 have 1,500 or fewer employees and one has more than 1,500 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, “Shared-Tenant Service Providers,” and “Other Local Service Providers” are small entities that may be affected by our action. In addition, limited preliminary census data for 2002 indicate that the total number of wired communications carriers increased approximately 34 percent from 1997 to 2002.

41. The Commission anticipates that any rules implementing section 621(a)(1) that result from this action would have at most a de minimis impact on small governmental jurisdictions ( e.g. , one-time proceedings to amend existing procedures regarding the method of granting competitive franchises). LFAs today must review and decide upon competitive cable franchise applications, and will continue to perform that role upon the conclusion of this proceeding; any rules that might be adopted pursuant to this NPRM likely would require at most only modifications to that process.

42. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): “(1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.”

43. As discussed in the NPRM , section 621(a)(1) states that LFAs must not unreasonably refuse to award competitive franchises. Should the Commission conclude ultimately that the procedures by which LFAs currently award competitive franchises conflict with the mandate of section 621(a)(1), it may adopt rules designed to ensure that the local franchising process does not create unreasonable barriers to competitive entry. Such rules may consist of specific guidelines ( e.g. , maximum timeframes for considering a competitive franchise application) or general principles designed to provide LFAs with the guidance necessary to conform their behavior to the directive of section 621(a)(1). As noted above, these rules likely would have at most a de minimis impact on small governmental jurisdictions. Even if that were not the case, however, the interrelated, high-priority federal communications policy goals of enhanced cable competition and accelerated broadband deployment would necessitate the establishment of specific guidelines and/or general principles for LFAs with respect to the process by which they grant competitive cable franchises. The alternative ( i.e. , continuing to allow LFAs to follow procedures that do not ensure that competitive cable franchises are not unreasonably refused) would be unacceptable, as it would be flatly inconsistent with section 621(a)(1). The Commission seeks comment on the impact that such rules might have on small entities, and on what effect alternative rules would have on those entities. The Commission also invites comment on ways in which the Commission might implement section 621(a)(1) while at the same time impose lesser burdens on small entities.

44. None.

45. This document does not contain proposed information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

46. Permit-But-Disclose . This proceeding will be treated as a “permit-but-disclose” proceeding subject to the “permit-but-disclose” requirements under § 1.1206(b) of the Commission's rules. Ex parte presentations are permissible if disclosed in accordance with Commission rules, except during the Sunshine Agenda period when presentations, ex parte or otherwise, are generally prohibited. Persons making oral ex parte presentations are reminded that a memorandum summarizing a presentation must contain a summary of the substance of the presentation and not merely a listing of the subjects discussed. More than a one-or two-sentence description of the views and arguments presented is generally required. Additional rules pertaining to oral and written presentations are set forth in § 1.1206(b).

47. Comments and Replies. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, interested parties may file comments on or before the dates indicated on the first page of this document. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies.

48. Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: http://www.regulations.gov . Filers should follow the instructions provided on the Web site for submitting comments. For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this proceeding, filers must transmit one electronic copy of the comments for each docket or rulemaking number referenced in the caption. In completing the transmittal screen, filers should include their full name, U.S. Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions, filers should send an e-mail to ecfs@fcc.gov , and include the following words in the body of the message, “get form.” A sample form and directions will be sent in response.

49. Paper Filers: Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail (although we continue to experience delays in receiving U.S. Postal Service mail). All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• The Commission's contractor will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building.

• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

• U.S. Postal Service first-class, Express, and Priority mail should be addressed to 445 12th Street, SW., Washington, DC 20554.

In 2002, NMFS conducted an LCS stock assessment that was peer-reviewed by three independent reviewers (67 FR 64098, October 17, 2002). While the peer reviews indicated areas that could be improved, they concluded that the stock assessment constituted the best available science. Based on the results of this stock assessment and the status determination criteria in the 1999 Fishery Management Plan (FMP) for Atlantic Tunas, Swordfish, and Sharks, NMFS determined that the LCS complex was overfished and overfishing was occurring. NMFS also determined that sandbar sharks were not overfished and overfishing was occurring, and that blacktip sharks were fully rebuilt. In addition to providing information regarding the status of the stocks, the stock assessment noted, among other things, that a reduction in catches of LCS may be necessary to recover the complex as a whole to the biomass expected to yield maximum sustainable yield (BMSY); that reductions in catch of species other than sandbar and blacktip sharks appeared to be the most appropriate; that individual species are responding differently to exploitation; and that juvenile survival is the vital rate that most affects overall population growth rates, thus supporting the need to protect reproductive females and juveniles.

The 2002 LCS stock assessment did not individually assess the status of dusky sharks. However, in the 1999 FMP, NMFS noted that dusky sharks are highly susceptible and vulnerable to overfishing. This vulnerability is due to several factors including: (1) their age of maturity is approximately 19 years (approximately 12 ft or 3.7 m FL); (2) they have few pups per litter (6 to 14 per litter); (3) they have a long gestation period (approximately 16 months); and (4) approximately 82 percent of those caught in commercial fisheries are brought to the vessel dead, making dusky sharks highly susceptible to dying on longline gear. This vulnerability has resulted in this species being listed as a species of concern under the Endangered Species Act (ESA) since 1997, and in 1999, being placed on the prohibited species list (due to litigation, the dusky shark prohibition did not go into effect until mid-2000). NMFS continues to be concerned about all life stages for dusky sharks and is expecting a final dusky shark assessment to be released later this year.

Shortly after the 2002 LCS stock assessment was released, NMFS began the process of amending the FMP for Atlantic Tunas, Swordfish, and Sharks (67 FR 69180, November 17, 2002). Consistent with the 1999 FMP and the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), the objectives of Amendment 1 were, among other things, to implement management measures to rebuild the LCS complex that were based on the best available science, to amend the rebuilding timeframe based on the best available science given that the 1998 stock assessment, on which the previous rebuilding timeframe was based, was found to be faulty, and to review shark management measures, in general.

During the Amendment 1 process, NMFS held seven scoping meetings in February and March 2003 (68 FR 3853, January 27, 2003), held six public hearings on draft Amendment 1 and the proposed rule (68 FR 45196, August 1, 2003, and 68 FR 54885, September 19, 2003), held one Advisory Panel meeting specific to draft Amendment 1 and the proposed rule (68 FR 51560, August 27, 2003), attended four Regional Fishery Management Council meetings (New England, Mid-Atlantic, and two for the Gulf of Mexico), and attended one ASFMC meeting. In addition to the comments at the public hearings and Council meetings, NMFS received over 30 written comments on draft Amendment 1 and the proposed rule. The final rule published on December 24, 2003 (68 FR 74746). Among other things, final Amendment 1 and its final rule revised the LCS rebuilding timeframe to 26 years, adjusted the LCS commercial quota, established trimester seasons and regional subquotas, removed the commercial minimum size, changed the recreational bag limit and minimum size, established a time/area closure off North Carolina, required line cutters and dipnets on bottom longline vessels, required vessel monitoring systems (VMS) on gillnet and bottom longline vessels during part of the year, and established criteria to use to modify the prohibited species list. Major changes from the proposed rule as a result of public comment included: delaying the effective date for the implementation of trimester seasons; a change in the reduction of the LCS quota from 40 to 45 percent; a decision to maintain existing regulations for the gillnet fishery; and a reduction in the proposed time/area closure from approximately 38,200 to 4,490 nm 2 .

As part of adjusting the commercial LCS quota in Amendment 1, NMFS also established a procedure to calculate the base commercial quota based on information from the stock assessment. Under this procedure, NMFS establishes the base commercial quota dependent on estimates of maximum sustainable yield (MSY) and what is needed to reach MSY, commercial landings (including landings from states), dead discards, and recreational harvest. This base quota is then split between the three different regions and three seasons. Before each season, NMFS adjusts the Federal shark quotas for each region based on the total landings reported by Federal dealers. These dealer reports include landings from both state and Federal waters.

The time/area closure was implemented to reduce discards of prohibited dusky and juvenile sandbar sharks under the rebuilding plan for LCS. The location of the time/area closure is in an area off North Carolina that has also been identified as essential fish habitat (EFH) for both sandbar and dusky sharks and as a habitat area of particular concern (HAPC) for sandbar sharks. The HAPC serves as important nursery and pupping grounds in areas adjacent to Hatteras and Ocracoke Islands and offshore of those islands. Other areas identified as HAPCs for similar reasons, such as the mouth of Great Bay, NJ, lower and middle Delaware Bay, and lower Chesapeake Bay, MD, were not included as time/area closures because they are predominantly in state waters and fishing effort is low in those areas. The HAPC off North Carolina is one of only four areas identified as an HAPC and is the only area that extends significantly into Federal waters (the HAPC in the Chesapeake Bay has a slight overlap with Federal waters near the mouth of the Bay).

During the public comment period for draft Amendment 1, commenters stated, among other things, that most nursery grounds are in nearshore waters, that closing inshore of 20 fathoms should be enough to protect neonate and juvenile sharks, that only state waters should be closed to protect juvenile sharks, that using dusky shark data when fishermen targeted them for the area closure was unfair, and that the time period for the closure was too long. As a result of these comments, NMFS re-analyzed the data in regard to the time/area closure including looking at the impacts of closing only waters inshore of 20 fathoms, reducing the time period, and considering dusky shark data only after they became prohibited. NMFS found that fishermen caught both dusky sharks and juvenile sandbar sharks at depths of up to 50 fathoms and that limiting the closure to depths inshore of 20 fathoms would greatly reduce the benefits of a time/area closure. NMFS also found that, of all the sharks observed in the fishery, the majority of juvenile sandbar sharks, all of the neonate sandbar sharks, and the majority of dusky sharks (all life stages) were caught in the time/area closure that was finalized. This time/area closure was first effective from January 1, 2005, to July 31, 2005.

On March 7, 2005, NMFS received a request from the North Carolina Department of Environment and Natural Resources, Division of Marine Fisheries (Petitioner), to initiate rulemaking for a regulatory amendment to 50 CFR 635.2 regarding the definition of the “Mid-Atlantic shark closed area.” The Petitioner seeks rulemaking to reduce the current closed area by changing the boundary from 55 fathoms from January to July in the middle part of the state to only include waters out to 15 fathoms coastwide for North Carolina by January 1, 2006. The Petitioner stated that this action would allow North Carolina fishermen access to the larger sharks in deeper waters from 15 to 55 fathoms and minimize discards of juvenile and protected sharks to a reasonable extent. The Petitioner stated that the available data suggest that juvenile sharks occur predominately near shore. Thus, the Petitioner proposed that closing out to 15 fathoms year-round along the entire North Carolina coastline instead of out to 55 fathoms for the middle part of North Carolina would still attain the management goal of protecting juvenile sandbar and prohibited dusky sharks. The Petitioner believes that the offshore extent of the current closed area encompasses the primary shark fishing grounds off North Carolina and severely restricts access to the shark quota off North Carolina, particularly during the first trimester.

The Petitioner also asserted that the current time/area closure off North Carolina is not justified based on available data and has been implemented in violation of at least three National Standards (e.g., #4, 8, and 10) of the Magnuson-Stevens Act. The Petitioner noted that the proposed change could address the above concerns and have positive significant economic benefits to fishermen, dealers, and fishing communities in the South Atlantic.

NMFS published a notice of receipt of the petition for rulemaking in the Federal Register (May 10, 2005, 70 FR 24494) and invited public comments for 60 days ending on July 11, 2005. NMFS received 18 letters, including letters from one Council, the state of North Carolina, commercial fishermen, commercial fisheries organizations, and other interested individuals. Summaries of and responses to comments are provided under the Public Comments section below.

After carefully considering the petition and all public comments, NMFS has decided not to initiate the requested rulemaking. Currently, NMFS does not have any new information to support the request by the Petitioner for a closure inside of 15 fathoms along the coast of North Carolina. The Petitioner has not submitted analyses to support their request. NMFS has already analyzed and rejected a closure out to 20 fathoms in response to comment during the Amendment 1 process because many juvenile sandbar sharks and dusky sharks were caught out to the 55 fathom line (see response to Comment 7). Without new information, NMFS has no basis to modify the existing time/area closure in the manner suggested by the Petitioner.

There are a number of items that could warrant modification of the time/area closure within a few years. First, NMFS will be conducting a stock assessment for LCS starting this year (September 15, 2005, 70 FR 54537). The results of this stock assessment are expected to be final in mid-2006. Second, NMFS expects a final dusky shark stock assessment to be released in early 2006. Third, because the time/area closure has now been in effect for one time period, NMFS can begin to examine the data and analyze the actual impacts of the closure, ecologically and economically. Pertinent, complete logbook data for the 2005 closure will be available in the summer of 2006. In addition, NMFS will analyze new, applicable data as it becomes available. Fourth, NMFS is working with the ASMFC to start work on an interstate coast-wide shark plan. If other states become more consistent with the Federal regulations, either through a coast-wide plan or on their own initiative, it is possible that the ecological benefits could warrant a review of existing Federal regulations, including the time/area closure. To note, the state of Florida is currently reviewing and the Commonwealth of Virginia has currently modified their state regulations regarding sharks. Fifth, NMFS recently released a proposed rule that, among other things, would establish criteria to be considered when implementing or modifying time/area closures (70 FR 48804, August 19, 2005). This proposed rule should be final in 2006.

Given the nature of the issues raised by the Petitioner and the lack of additional information supporting the petition, NMFS believes that the results of the first three items above will provide valuable information when considering a modification to the existing time/area closure. Additionally, NMFS will continue to work with the ASMFC and/or individual states regarding consistent shark regulations and management measures. NMFS also encourages the Petitioner to work with NMFS scientists and industry in pursuing cooperative research on reducing bycatch of juvenile and sub-adult sandbar and dusky sharks. Results from such studies have been critical to providing alternate fishing practices in other areas that maintain target catch while also reducing bycatch.

During the public comment period, individuals and groups provided comments on NMFS' notice in the Federal Register on the receipt of a petition for rulemaking by the Petitioner. Comments were sent via letter, FAX, and E-mail. The comments are summarized below, together with NMFS' responses. The comments and responses are categorized by major subject headings.

Comment 1: Commenters indicated that while the information during the mid and late 1990s provides excellent coverage of the fishery, the observer program has operated sporadically since 2000. In addition, commenters noted that the Federal Register notice stated that the time/area closure was based on observer data. The commenters felt that this statement was misleading, and that NMFS selectively examined a shorter time period of observer data from 2001 to 2002, which is less extensive than the earlier data in terms of geography and sample size. The commenters felt the Agency would have drawn a different conclusion and made more acceptable recommendations if it had used all available observer data.

Response: The observer program began in 1994, as a voluntary research program under which observers went to the docks and went on vessels that were willing to take them. Vessels cooperated with this program for the first few years; however, this type of program did not necessarily result in coverage that was representative of all vessels fishing. By the late 1990s, because of changing management measures based in part on observer data, the number of vessels willing to take an observer declined, and NMFS had concerns regarding the quality of the observer data and how representative the data was becoming. In January 2002, in order to obtain high-quality representative data, NMFS made participation in the observer program mandatory, and vessels which recorded past landings were selected to carry observers on a random basis. Thus, NMFS believes that the quality of information obtained from the observer program has improved over time.

In examining the current time/area closure, NMFS did not selectively examine observer data from 2001 to 2002, but rather, examined the entire observer timeframe through 2002. During the public comment period for draft Amendment 1, fishermen commented that NMFS should not use dusky shark data before dusky sharks became a prohibited species in 2000. Fishermen stated that they used to target dusky sharks and that they should not be penalized for targeting them before they were prohibited. In response to their comments, NMFS examined the shorter, as well as the longer, timeframes in final Amendment 1.

For sandbar sharks, the final Amendment examined only the longer timeframe (1994 to 2002) because sandbar sharks have been an allowed species since 1994. According to observer data from 1994 to 2002, 12,445 sandbar sharks were observed in the fishery as a whole and 6,755 were caught in the final time/area closure. Of those caught in the final time/area closure, 4,149 (61 percent) were neonates and juveniles. All neonate sandbar sharks and 81 percent of all juvenile sandbar sharks observed for the entire fishery (i.e., all of the Atlantic and Gulf of Mexico) were encompassed by the final time/area closure.

For dusky sharks, using the shorter timeframe (2001 to 2002), only 68 sharks were observed in the final time/area closure. However, this observed catch of dusky sharks remained high (62 percent) in comparison to the rest of the Atlantic and Gulf of Mexico. Using the longer timeframe (1994 to 2002), 1,392 dusky sharks were observed caught in the final time/area closure (79 percent), of which 92 percent were neonates or juveniles. Only 292 were observed caught in the Atlantic outside the time/area closure. These numbers reflect catches of dusky sharks in Federal waters only.

Comment 2: The observer program was biased because North Carolina was one of the few states helping with data prior to the mandatory observer program. Therefore, most of the data were collected from this area, skewing the data.

Response: When the observer program first started in 1994, the observers focused on states known to land a lot of sharks. These states included North Carolina and Florida. Over time, the observers included other states; however, as reflected in landing reports and permit holders, North Carolina and Florida continued to be major centers of shark fishing. Since the observer program became mandatory in 2002, the number of vessels selected from each state has been based on prior year's landings. This allows coverage to be representative of fishing effort.

Comment 3: North Carolina fishermen are forced to float gear for LCS during the summer season when 85 to 90 percent of all catches in this season are adult or, at the very minimum, sub-adults. Juvenile sharks migrate north during the summer; they are not in the time/area closure during the summer. In addition, by making fishermen fish outside of 50 fathoms to 85 fathoms, NMFS is forcing them to kill more dusky sharks since they are predominately in 50 to 85 fathoms.

Response: The observer data used in Amendment 1 indicate that dusky and sandbar sharks are caught on bottom longline gear in the time/area closure from January through July. The number of sharks caught in the closed area after July are relatively low; thus, NMFS did not extend the time/area closure past July. During Amendment 1, NMFS did not examine pelagic longline data since LCS are generally not caught in large numbers on pelagic longline gear compared with bottom longline gear. However, now that the time/area closure has been in effect from January through July 2005, NMFS can examine the impacts of the time/area closure on fishermen who use bottom longline gear as well as on fishermen who use pelagic longline gear, including their discard rates of dusky sharks.

Comment 4: Commenters stated that the status of the dusky sharks is unknown because there has been no stock assessment on that species. Commenters also noted that the peer-reviewed stock assessment of the sandbar shark population indicated that the status has improved and that no reduction in instantaneous fishing mortality (F) appears necessary for sandbar sharks to achieve BMSY. Commenters indicated that, after reviewing the 2002 stock assessment, they found no definitive evidence that supports the NMFS' assertion that the LCS complex is overfished or that overfishing is occurring. In addition, commenters noted that peer reviewers of the 2002 LCS stock assessment were concerned about applying the results to the LCS complex as a whole. Given these results, commenters stated that while taking a precautionary approach in the face of uncertainty is prudent, NMFS took the precautionary approach to the extreme.

Response: As noted above, NMFS is concerned about the status of dusky sharks for a number of reasons, including its life history and susceptibility to fishing gear. A stock assessment for dusky sharks is anticipated for early 2006.

As for sandbar sharks, while the 2002 stock assessment indicates that sandbar sharks are no longer overfished, overfishing is occurring and, per the 1999 FMP, their status has not yet reached a stage where they can be called “rebuilt.” With regard to the complex as a whole, results of the 2002 LCS stock assessment met the overfishing and overfished criteria in the 1999 FMP. These results indicate that, while the stock status had improved since the 1998 stock assessment, the fishing mortality level was not sustainable. The details and point estimates of the different models used in the 2002 LCS stock assessment are given in Table 3.1 and Table 3.2 of the 2002 Emergency Rule to Implement Management Measures in the Atlantic Shark Fisheries Consistent with the 2002 Stock Assessments. As described in that document, the majority of the models indicated that the resource (the LCS complex) is overfished. Even in the models where the resource is not overfished, the models indicate that the rebuilding target biomass has not been met.

In addition, the LCS assessment was peer reviewed pursuant to a settlement agreement in shark litigation pending at that time. The overall conclusions of these reviews were that the stock assessment was state-of-the-art and a scientifically rigorous body of work that used the best scientific information available. The peer reviewers generally agreed that, while management measures taken as of 2002 may have halted the decline in these stocks, current exploitation rates (based on the stock assessment) would not stabilize them at, or allow them to rebuild to, MSY levels. The peer reviewers noted that “inference by subtraction” needs to be examined and NMFS intends to examine options to address this concern at the upcoming LCS assessment. While there was concern over this inference, one peer reviewer also noted that “Whether the conclusions from the LCS complex assessment provide sufficient information on which to take management action depends on the level of risk one is willing to accept. It should be noted that many shark species have low productivity and are long-lived, so that failure to take action could result in long-term depletion of some species.” Another peer reviewer indicated that for the LCS group, reductions in the total allowable catch for species other than sandbar and blacktip should be considered, and that for sandbar and other sharks, further reductions in fishing related mortalities should be achieved through the decrease of bycatch mortality. This, along with the rest of that review, the comments of the other reviewers, the stock assessment itself, and the status determination criteria outlined in the 1999 FMP, led NMFS to determine that the LCS complex has been exploited beyond sustainable rates, with populations at or below levels required to sustain MSY. NMFS does not believe the suite of measures in Amendment 1, including the existing time/area closure, are extreme.

In order to reduce bycatch of dusky and sandbar sharks, NMFS opted to close a specific area to protect a known nursery ground of these species. This is also in accordance with the 2002 stock assessment which recommends protections of reproductive females and juveniles. As noted above, the closure area should reduce dusky shark catch by 79 percent, and neonate and juvenile sandbar shark catch by 61 percent. In addition, the area off North Carolina is the only area where a large portion of a designated HAPC enters Federal waters. Thus, NMFS believed that closing an area that included a HAPC to protect juvenile sandbar sharks was warranted to reduce fishing mortality without increasing bycatch.

Comment 5: Commenters stated that one peer reviewer indicated that the 2002 shark evaluation workshop (SEW) report could not be judged in terms of scientific findings and management recommendations.

Response: NMFS believes that this remark was taken out of context; it was made in regard to the description of the way the 2002 stock assessment was completed and the statement of work for the review. The 2002 stock assessment was conducted in two parts. The first part included a meeting to discuss the data, possible models, and underlying assumptions. This was summarized and published as the “Final Meeting Report of the 2002 Shark Evaluation Workshop.” The second part was the actual assessment where the data and models were run, titled the “Stock Assessment of Large Coastal Sharks in the U.S. Atlantic and Gulf of Mexico.” Pursuant to a settlement agreement in litigation pending at that time, the statement of work asked the reviewers to review the SEW report in terms of scientific findings and management recommendations. There were no such findings or recommendations in the 2002 SEW Final meeting report; rather, all findings and recommendations were in the 2002 stock assessment. Thus, the peer reviewer was clarifying the documents that he was reviewing for the purposes of the peer review. NMFS believes that this particular remark was not a comment on the scientific merits of the 2002 stock assessment results.

Comment 6: Blacktip and sandbar sharks are the dominant species taken in the fishery. Managing by the least common denominator is problematic. The stock assessment recommends managing on a more species-specific basis.

Response: As stated in Amendment 1, NMFS does not have the information necessary yet to manage sharks on a species-specific basis. Until fishermen and dealers report on a species-specific basis more consistently (currently about 20 percent of LCS landings are unclassified despite regulations requiring LCS species-specific reporting) and until NMFS has reliable scientific evidence that fishermen can target certain species of sharks without substantial bycatch or bycatch mortality of other shark species, NMFS believes that establishing and enforcing species-specific quotas is not feasible. If the fishermen do not identify sharks correctly (and some fishermen have commented that they cannot identify all species of sharks), then having species-specific quotas would not be effective at preventing overfishing on depleted species while allowing increased fishing on healthy or rebuilt species. Furthermore, if fishermen cannot reliably target sandbar or blacktip sharks without catching and discarding a significant number of other sharks (e.g., dusky sharks), then having species-specific quotas may still result in fishery closures when one of the quotas is reached.

Comment 7: Commenters indicated that a 1996 observer report concluded that the area inshore of 15 fathoms should be closed to protect juvenile sharks and prohibited dusky sharks that occur in the region.

Response: The 1996 observer report referenced is the final report of the Marine Fisheries Initiative (MARFIN) study (NA57FF0286) published by Branstetter, 1997. The commenters also refer, through the 1996 observer report, to Musick et al. , 1993. The 1996 observer report notes that small sandbar sharks are less than 120 cm fork length (FL). However, the 1996 observer report also notes that male sandbar sharks reach maturity around 142 cm FL (170 cm total length [TL]) and females at < 150 cm FL (180 cm TL). Therefore, the 1996 study's recommendations relative to 120 cm FL would not have protected a substantial number of juveniles and sub-adults. Many of the figures in the 1996 observer report (e.g., Figures 9, 10, 11, 12, and 17) indicate that large numbers of juvenile sandbar sharks were caught off North Carolina in depths greater than 10 fathoms. While these figures describe the data in terms of less than or equal to 10 fathoms or greater than 10 fathoms, the 1996 observer report recommends in the text that 15 fathoms be used rather than 10 fathoms. This recommendation is due to one year (1996) where numerous small sandbar sharks (less than 120 cm FL) and small dusky sharks (less than 140 cm FL) were caught between 10 and 15 fathoms and few sharks were taken inshore of 10 fathoms.

The 1996 observer report also notes that dusky sharks comprised about ten percent of the catch in North Carolina waters, and consisted of two general size classes: young juveniles and sub-adults/adults. Figure 17 indicated that many of these dusky sharks are caught in waters greater than 10 fathoms. This and the text regarding small dusky sharks being caught out to 15 fathoms indicate that a 15-fathom boundary could allow many juveniles and sub-adults to be caught. Additionally, in the case of dusky sharks, NMFS is trying to reduce fishing mortality on all life stages (neonates, juvenile, and adults), not just juveniles.

Furthermore, as a result of public comment received on Amendment 1, NMFS examined the data to assess the ecological benefit of a closure out to only 20 fathoms. NMFS found that numerous juvenile sandbar sharks and dusky sharks were caught outside the 20 fathom line; many were caught at the 55 fathom line. As outlined in the response to Comment 15 under “Time/Area Closure Comments” in Amendment 1, NMFS included a buffer of approximately two miles to the seaward boundary of the time/area closure so that it extended to 60 to 80 fathoms. NMFS made this same data available to the state of North Carolina to analyze. No new interpretations of this data or analyses by the state of North Carolina have been presented to NMFS to date. Based on NMFS' previous analysis of a closure out to 20 fathoms, as requested by public comment on Amendment 1, NMFS believes that a large number of juvenile sandbar and dusky sharks would be caught outside of 15 fathoms.

Comment 8: One commenter questions why all dusky shark life stages were included when selecting the seaward boundary of the time/area closure.

Response: NMFS is concerned about all life stages of dusky shark, not just juvenile stages, because this species is highly susceptible and vulnerable to overfishing because of its life history traits. The dusky shark is currently listed as a species of concern under the ESA. A dusky shark stock assessment is currently underway. The area closed off North Carolina has most of the observed dusky shark catches for the entire bottom longline fishery.

Comment 9: A commenter asked if a quota reduction would have given the same result without having to establish the time/area closure off North Carolina.

Response: The 2002 stock assessment indicates that reductions in fishing effort and mortality are needed for the biomass to reach MSY. In Amendment 1, NMFS determined that it would need to reduce the catch by greater than 50 percent in order to rebuild LCS. In addition, the stock assessment recommended the protection of reproductive females and juveniles.

However, because Amendment 1 was implementing a number of regulations that could reduce fishing mortality including the time/area closure and gear restrictions, NMFS felt that reducing the catch by 45 percent, and improving compliance with the regulations including the recreational regulations would be sufficient to rebuild the stock within the rebuilding timeframe. In addition, because the time/area closure off North Carolina is an important nursery area for dusky and sandbar sharks, protection of these species in this area would only be accomplished through a closure rather than an overall reduction in LCS quota.

Comment 10: One commenter stated that to be excluded inside of 15 fathoms in the summer serves no purpose other than to put more pressure on everything but blacktip sharks; a closure out to the 15 fathom line would make sense during the winter months when more juveniles occur around the 15 fathom depth contour, but would not work during the summer months. The commenter claimed that blacktip sharks predominate inside 15 fathoms, yet NMFS insists that fishermen fish outside of it.

Response: The Petitioner requested changing the current time/area boundary to 15 fathoms, year-round. However, the current time/area boundary of 55 fathoms was chosen because the available data indicate that juvenile dusky and sandbar sharks occur in the current time/area closure during the months of January through July. Thus, the time/area closure location and timeframe was selected based on the distribution of these age classes. NMFS may consider changing the boundaries and timeframe of the closure if new information warrants any changes. NMFS did not examine the availability of blacktip sharks within or without the time/area closure since blacktip sharks are considered rebuilt and were not the species of concern.

Comment 11: Commenters indicated that using only the 2001 to 2002 observer data constitutes a violation of National Standard 2.

Response: National Standard 2 states that conservation and management measures shall be based upon the best scientific information available. As described above, in developing Amendment 1, NMFS used all observer data when examining the time/area closure. As noted in the response to Comment 1 above, NMFS considered the longer and shorter timeframes for dusky sharks in response to comments from fishermen on draft Amendment 1. NMFS believes that using all available data, and taking into consideration public comment, is consistent with National Standard 2.

Comment 12: Commenters indicated that the closure off North Carolina discriminates against the fishermen in North Carolina in violation of National Standard 4.

Response: National Standard 4 states that conservation and management measures shall not discriminate between residents of different states, and if it becomes necessary to allocate or assign fishing privileges among fishermen, that such allocation be fair and equitable to all fishermen, be reasonably calculated to promote conservation, and be carried out in such a manner that no particular individual, corporation, or other entity acquires an excessive share of such privileges. While the time/area closure may affect fishermen differently, as discussed in Amendment 1, it applies equally to all fishermen in any state (and affects fishermen who travel from other states to fish in waters off North Carolina), and is needed as a conservation measure to reduce bycatch of juvenile sandbars and prohibited dusky sharks.

Comment 13: One commenter questioned how the time/area closure off North Carolina was consistent with National Standard 6.

Response: National Standard 6 requires NMFS to take into account and allow for variations among, and contingencies in, fisheries, fishery resources, and catches. While other states also catch juvenile sharks, as described above, the waters off North Carolina are a known pupping and nursery ground for several species of sharks, particularly sandbar and dusky sharks. This is shown in the data with most of the juvenile sandbar sharks and prohibited dusky sharks for the entire fishery being caught in the existing time/area closure. While different states may have different impacts on shark stocks and life stages due to different trip limits and associated landings, NMFS accounts for all sources of mortality during the stock assessment process to develop Federal conservation and management measures consistent with the Agency's obligations under the National Standards and other provisions of the Magnuson-Stevens Act. As the fishery and stock status changes over time, NMFS will consider amending existing management measures to take into account this variability, consistent with National Standard 6. Additionally, in the proposed rule for the draft HMS FMP (August 19, 2005, 70 FR 48804), NMFS is proposing criteria to be considered when modifying time/area closures.

Comment 14: NMFS counts landings of sharks caught in state waters against the appropriate Federal shark quotas. However, different states have widely varying trip limits. Therefore, states with higher trip limits will have a larger impact (i.e., greater reduction) on the available Federal shark quota than states with lower trip limits in place to reduce the harvest of juveniles sharks. One commenter questioned how these measures are consistent with National Standards 4, 5 (efficiency in terms of harvesting adult fish), 6 (in terms of adult and juvenile harvest in HAPCs and the Economic Exclusive Zone [EEZ] off other states versus no harvest of adult or juveniles from January through July off North Carolina), and 8 (in terms of providing for sustained participation of the North Carolina shark fishing community).

Response: While NMFS is concerned about landings occurring in state waters, without taking preemptive action, NMFS does not have jurisdiction over state fishermen who fish exclusively in state waters. All fishermen with Federal shark permits are required to abide by Federal regulations, even in state waters, unless the state has more restrictive regulations. NMFS is working through the ASFMC to initiate an interstate coast-wide shark plan and has requested states that are not consistent with the Federal regulations to reconsider their regulations.

Consistency with National Standards 4 and 6 are addressed in the responses above. National Standard 5 states that conservation and management measures shall, where practicable, consider efficiency in the utilization of fishery resources; except that no such measure shall have economic allocation as its sole purpose. The time/area closure combined with VMS requirements allow fishermen to travel through the closed area and allow the shark fishery to operate at the lowest possible cost (e.g., fishing effort, administration, and enforcement), while furthering conservation and management objectives and maintaining consistency with National Standard 5.

National Standard 8 states that conservation and management measures shall, consistent with the conservation requirements of the Magnuson-Stevens Act (including the prevention of overfishing and rebuilding of overfished stocks), take into account the importance of fishery resources to fishing communities in order to provide for the sustained participation of such communities and, to the extent practicable, minimize economic impacts on such communities. Consistent with National Standard 8, NMFS considered the impacts of the time/area closure on fishing communities in Amendment 1 and minimized adverse impacts to the extent practicable. Amendment 1 recognized that the time/area closure may impact particular communities; however, the measure was needed in order to ensure that overfished LCS are rebuilt and to prevent overfishing on LCS, as mandated by National Standard 1. NMFS initially proposed and took public comment on a much larger time/area closure (approximately 32,800 nm2 from VA to SC) than the current time/area closure. Based on comments from the public, NMFS conducted additional analyses and adjusted the final rule so that the time/area closure's seaward boundary followed the 55 fathom contour (4,490 nm2). This area was selected to include all observed catches of dusky and sandbar sharks while mitigating social and economic impacts on fishing communities in North Carolina to the extent practicable, consistent with National Standard 8. Finally, in the final rule, NMFS also delayed implementation of the time/area closure for a year to allow fishermen time to adjust to the new regulations (December 24, 2003, 68 FR 74746).

Comment 15: The time/area closure off North Carolina is in violation of National Standard 10.

Response: As stated in Amendment 1, the time/area closure does not cause fishermen to fish in an unsafe manner. NMFS urges fishermen to use caution, but cannot control what individual fishermen do in response to the time/area closure. VMS also adds safety by allowing fishermen to traverse the closed area and provide yet another method of locating a vessel in case of an emergency.

Comment 16: The Federal Register notice indicated that the “Advisory Panel (AP) members noted that the LCS stock assessments determined that sandbar and dusky sharks have been overfished and are not currently rebuilt.” The Petitioner requested that NMFS re-issue the Federal Register notice removing the AP reference so that it would not solicit negative comments on the petition.

Response: NMFS did not re-issue the Federal Register notice for the petition for rulemaking. The selected reference was an accurate statement made by AP members during the AP meeting in March of 2005. In addition, it is an accurate representation of the stock assessment for the LCS complex.

Comment 17: The state of North Carolina has petitioned NMFS to modify the closure line from the current 55 fathom contour to the 15 contour. With VMS already required on shark vessels, this should not present an enforcement difficulty.

Response: The 15-fathom line is a zig-zag line that approaches the existing closure line in some places. As such, the 15-fathom line would open only parts of the existing closure, and despite VMS, would be difficult to enforce.

Comment 18: NMFS calculates maturity based on length, but maturity can also be based on size of shark fin size or pounds to fin weight.

Response: An accepted and relatively easy measure to determine maturity, based on scientific data, is fish length. Thus, NMFS uses fish length to assess maturity. Shark fin size or pounds to fin weight is not used by the scientific community as a measure of maturity. Additionally, such measurements would likely be more variable or hard to measure at sea. Thus, in order to ensure reliable data collection on stages of maturity, NMFS is unlikely to change to a method that would introduce more variability in the data and potential error in determining maturity.

Comment 19: Commenters noted that there has been adoption of careful handling and release technologies for bycatch by shark bottom longline fishermen, which should help release bycatch alive. In addition, shark bottom longline fishermen may be required to attend workshops to familiarize themselves with these techniques starting in 2006.

Response: Dusky sharks have low survival on longline gear under current fishing practices (e.g., only approximately 18 percent of dusky sharks survive after being caught on longline gear). Thus, bycatch reduction methods must include the reduction of dusky sharks caught with longline gear, not just handling and releasing techniques. This warrants a time/area closure rather than other management measures, such as safe handling and releasing techniques or minimum size limits. Should alternative fishing practices be developed that improve the survival of dusky or other sharks, NMFS would review the necessity for the time/area closure and other management measures, as appropriate. As mentioned above, NMFS encourages the Petitioner to work with NMFS scientists and industry in pursuing cooperative research on reducing bycatch of juvenile and sub-adult sandbar and dusky sharks.

Comment 20: NMFS should consider how to develop economic relief for the directed shark vessel operators who have been marginalized financially by Amendment 1 that led to this time/area closure. The time/area closure encompasses the primary fishing grounds off North Carolina and severely restricts access to the shark fishing quota off North Carolina.

Response: NMFS delayed implementation of the time/area closure for a year to allow fishermen time to adjust to the new regulations (December 24, 2003, 68 FR 74746). In addition, during the proposed rule stage of Amendment 1, NMFS took comment on a much larger time/area closure (31,387 nm2 from VA to SC) than the current time/area closure. Based on comments from the public, NMFS conducted additional analyses and implemented a much smaller time/area closure. NMFS also provided, in section 8.5.9 of Amendment 1, a list of other options for economic relief for fishermen.

Comment 21: Proper and logical management dictates that NMFS should set aside an adequate incidental quota to reduce or eliminate regulatory discards by covering the inevitable incidental catches in the fisheries prior to allocating directed quotas.

Response: NMFS has considered this type of option and most recently accepted comments during the scoping process for the draft HMS FMP in 2004. NMFS may consider this type of option in the future.

Comment 22: North Carolina has been a willing and responsible partner with NMFS with regards to shark conservation. Measures to help conserve sharks were first implemented by North Carolina in February 1993, before NMFS enacted the Shark FMP in April 1993. Those measures remained in effect until July 1997 when North Carolina closed its state waters to shark fishing for species within the pelagic group. North Carolina was the only state to act upon a request from NMFS to close their waters to shark fishing. These measures were implemented to protect immature sharks and as mentioned, have remained in effect for nine years. North Carolina fishermen have fully cooperated with voluntary Federal observer programs to help managers collect accurate information on sharks.

Response: NMFS appreciates all the efforts that the state of North Carolina and its fishermen have taken to protect juvenile sharks. While NMFS has decided not to initiate rulemaking at this time, NMFS is committed to reviewing all shark management measures, including time/area closures, when new stock assessment and/or new information becomes available. NMFS would like to work with North Carolina to review new information as partners in shark management.

Comment 23: Any closure considered for conservation reasons should be imposed on all commercial and recreational gear that interacts with the species of concern. There is no justification for NMFS' continued use of closed areas to one gear type to be essentially used to reallocate the catches of species of concern to another similar gear type or user group.

Response: The current time/area closure is based on available data on bycatch and bycatch mortality by bottom longline gear in a known pupping and nursery area including and surrounding an identified HAPC. Mortality by other gear types (such as pelagic longline or handgear) may be considered in the future, as appropriate. Additionally, if finalized, the criteria proposed in the draft HMS FMP would provide a basis on which NMFS could consider modifying the existing time/area closure to include other gears.

Comment 24: Commenters requested that NMFS needs to leave the closure in place for species preservation and stock rebuilding. Sharks need to be protected since certain species are endangered, and they are all part of the ecological harmony that used to exist before commercial fishing.

Response: NMFS agrees that the current time/area closure is warranted and has decided not to initiate rulemaking until new data are available from the stock assessments of both dusky and sandbar sharks, the two species most affected by the time/area closure. Based on the status of those stock assessments, other information regarding the effectiveness of the closure, and actions of other states in an interstate coast-wide shark management plan, NMFS may consider revising the size, scope, and/or duration of the closure as well as potentially eliminating the closure, as appropriate.

Comment 25: Shark fishing off North Carolina needs to be completely banned. The commercial interests have gained control of our government agencies, which now allow excess killing of marine life. The time/area closure should be enlarged to ban shark fishing along the entire coast of the United States (and out to its deepest waters) with a complete moratorium on shark fishing for a five-year period. Fishermen can find other areas to deplete. Sharks are a part of our children's heritage, and NMFS has allowed fishermen, who profit from killing them, to take just about every last one of them. There should be fines of $15,000.00 for a first offense for killing sharks with a fine of $100,000.00 for a second offense.