Notices. Notification of a request for EFPs to conduct experimental fishing; request for comments

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BILLING CODE 3510-13-P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration [I.D. 040504C] Atlantic Coastal Fisheries Cooperative Management Act Provisions; Application for Exempted Fishing Permits

(EFPs)AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Notification of a request for EFPs to conduct experimental fishing; request for comments. SUMMARY: The Director, State, Federal and Constituent Programs Office, Northeast Region, NMFS (Office Director) has made a preliminary determination that the subject EFP application contains all the required information and warrants further consideration. The Office Director has also made a preliminary determination that the activities authorized under the EFPs would be consistent with the goals and objectives of Federal management of the American lobster resource. However, further review and consultation may be necessary before a final determination is made to issue EFPs. Therefore, NMFS announces that the Office Director proposes to issue EFPs that would allow a maximum of six vessels to conduct fishing operations involving the use of one juvenile lobster collector trap per vessel that are otherwise restricted by the regulations governing the American lobster fisheries of the Northeastern United States. The EFP involves the non-destructive collection of size frequency and population data on legal and sublegal lobsters as part of an ongoing research project to monitor the offshore lobster fishery in Lobster Management Area 3. It would not involve the authorization of any additional trap gear in the area. A maximum of six participating commercial fishing vessels will collect detailed abundance and size frequency data on the composition of lobsters in three general offshore study areas in a collaborative effort with the University of New Hampshire

(UNH)and the Atlantic Offshore Lobstermen's Association

(AOLA)project. This EFP requests that each participating commercial fishing vessel utilize one modified juvenile lobster collector trap to collect population data. The lobster trap modifications are to the escape vents, and trap entrance head, not to the trap's size or configuration. Therefore, this modified trap would impact its environment no differently than the regular lobster trap it replaces and will add no additional traps to the area. After data is collected on lobsters in the trap, all sub-legal and berried female lobsters will be immediately returned to the sea. The EFP waives the American lobster escape vent requirement specified at 50 CFR 697.21(c) for a maximum of one trap per vessel for a maximum of six vessels in the program. Therefore, this document invites comments on the issuance of EFPs to allow a maximum of six commercial fishing vessels utilize a maximum of six modified lobster traps and to collect statistical data using modified lobster trap gear. DATES: Comments on this lobster EFP notification for offshore lobster monitoring and data collection must be received on or before April 27, 2004. ADDRESSES: Written comments should be sent to Patricia A. Kurkul, Regional Administrator, NMFS, Northeast Regional Office, 1 Blackburn Drive, Gloucester, MA 01930-2298. Mark the outside of the envelope “Comments—Lobster EFP Proposal.” Comments also may be sent via facsimile

(fax)to 978-281-9117. Comments on the Lobster EFP Proposal may be submitted by e-mail. The mailbox address for providing e-mail comments is *Lob0104@noaa.gov* . Include in the subject line of the e-mail comment the following document identifier: “Comments—Lobster EFP Proposal.” FOR FURTHER INFORMATION CONTACT: Bob Ross, Fishery Management Specialist,

(978)281-9234, fax (978)-281-9117. SUPPLEMENTARY INFORMATION: Background The regulations that govern exempted fishing, at 50 CFR 600.745(b) and 697.22 allow the Regional Administrator to authorize for limited testing, public display, data collection, exploration, health and safety, environmental clean-up, and/or hazardous removal purposes, and the targeting or incidental harvest of managed species that would otherwise be prohibited. An EFP to authorize such activity may be issued, provided there is adequate opportunity for the public to comment on the EFP application, the conservation goals and objectives of Federal management of the American lobster resource are not compromised, and issuance of the EFP is beneficial to the management of the species. The American lobster fishery is the most valuable fishery in the northeastern United States. In 2002, approximately 82 million pounds (37,324 metric tons (mt)) of American lobster were landed with an ex-vessel value of approximately $293 million. American lobsters experience very high fishing mortality rates and are overfished throughout their range, from Canada to Cape Hatteras. Although harvest and population abundance are near record levels due to high recent recruitment and favorable environmental conditions, there is significant risk of a sharp drop in abundance, and such a decline would have serious implications. Operating under the Atlantic States Marine Fisheries Commission's interstate management process, American lobsters are managed in state waters under Amendment 3 to the American Lobster Interstate Fishery Management Plan (Amendment 3). In Federal waters of the Exclusive Economic Zone (EEZ), lobster is managed under Federal regulations at 50 CFR part 697. Amendment 3, and compatible Federal regulations established a framework for area management, which includes industry participation in the development of a management program which suits the needs of each lobster management area while meeting targets established in the Interstate Fisheries Management Program. The industry, through area management teams, with the support of state agencies, have played a vital role in advancing the area management program. To facilitate the development of effective management tools, extensive monitoring and detailed abundance and size frequency data on the composition of lobsters throughout the range of the resource are necessary. This proposed EFP will continue a project involved in extensive monitoring and detailed population information of American lobster in three offshore study areas using modified lobster trap gear that would otherwise be prohibited. Proposed EFP The proposed EFP is a continuation of a project begun in 2003, and is submitted by UNH in a collaborative effort with the AOLA and six commercial lobster fishing vessels that are also members of the AOLA. The EFP proposes to collect statistical and scientific information as part of a project designed to monitor the offshore American lobster fishery to collect data that will assist the development of management practices appropriate to the fishery. Participants in this project are funded by, and under the direction of the Northeast Consortium, a group of four research institutions (University of New Hampshire, University of Maine, Massachusetts Institute of Technology, and Woods Hole Oceanographic Institution) which are working together to foster this initiative. Each of six commercial fishing vessels involved in this monitoring and data collection program would collect detailed abundance and size frequency data on the composition of all lobsters collected from one string of approximately 40 lobster traps, including data on sub-legal, and egg bearing females in addition to legal lobsters. This EFP would not involve the authorization of any additional lobster trap gear in the area. Two vessels would collect data from each of three general study areas: The Southern—Hudson Canyon Area; the Middle—Veatch Canyon Area; and the Northern—Georges Bank and Gulf of Maine Area. The participating vessels may retain on deck sub-legal lobsters, and egg bearing female lobsters, in addition to legal lobsters, for the purpose of collecting the required abundance and size frequency data specified by this project. Data collected would include size, sex, shell disease index, and the total number of legals, sub-legals, berried females, and v-notched females. All sub-legals, berried females, and v-notched females would be returned to the sea as quickly as possible after data collection. Pursuant to 50 CFR 600.745(3)(v), the Regional Administrator may attach terms and conditions to the EFP consistent with the purpose of the exempted fishing. This EFP requests the inclusion of a maximum of one modified lobster trap per vessel, designated as a juvenile lobster collector trap, in the string of approximately 40 traps. This modified lobster trap would have a smaller entrance head, no escape vents and would be made of a smaller mesh than the traditional offshore trap to catch and retain a high percentage of juvenile lobsters in the 30-65 mm carapace length range. The smaller entrance head would exclude large lobsters from this trap and decrease the probability of cannibalism within the trap. The modifications to the trap are to the escape vents, and trap entrance head, not to the trap's size or configuration, therefore this modified trap would impact its environment no differently than the regular lobster trap it replaces. This EFP will add no additional traps to the areas. Due to modifications to the escape vent, the EFP proposed to waive the American lobster escape vent requirement specified at 50 CFR 697.21(c) for a maximum of one trap per vessel for a maximum of six vessels in the program. With the exception of the one modified juvenile lobster collector trap, all traps fished by a maximum of six participating vessels would comply with all applicable lobster regulations specified at 50 CFR part 697. All sample collections would be conducted by six federally permitted commercial fishing vessels, during the course of regular commercial fishing operations. There would not be observers or researchers onboard every participating vessel. This project, including the lobster handling protocols, was initially developed in consultation with NOAA Fisheries and University of New Hampshire scientists. To the greatest extent practicable, these handling protocols are designed to avoid unnecessary adverse environmental impact on lobsters involved in this project, while achieving the data collection objectives of this project. Authority: 16 U.S.C. 1801 *et seq.* Dated: April 6, 2004. Alan D. Risenhoover, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. E4-800 Filed 4-9-04; 8:45 am] BILLING CODE 3510-22-S COMMODITY FUTURES TRADING COMMISSION Futures Market Self-Regulation AGENCY: Commodity Futures Trading Commission. ACTION: Request for comment. SUMMARY: The Commodity Exchange Act (the “Act”), 1 through Core Principles added by the Commodity Futures Modernization Act of 2000 (“CFMA”) 2 and otherwise, imposes upon trading facilities (designated contract markets or ”DCMs” and derivatives transaction execution facilities or “DTEFs”), upon registered futures associations (“RFAs”), 3 and upon clearinghouses (derivatives clearing organizations or “DCOs”) certain self-regulatory obligations with respect to futures commission merchants (“FCMs”) that are members of such DCMs, DTEFs, RFAs, and DCOs (together, “self-regulatory organizations” or “SROs”). In order to avoid duplicative supervisory burdens upon FCMs that are members of more than one SRO, the Commodity Futures Trading Commission (the “Commission” or “CFTC”) permits SROs to enter into voluntary, cooperative agreements to both allocate certain supervisory responsibilities among themselves so that each FCM has a single designated self-regulatory organization (“DSRO”) and to share relevant financial and risk information among themselves. Under such an agreement, each DSRO is primarily responsible for conducting periodic examinations of firms assigned to it, and the other SROs rely upon the findings of such examinations, yet under the Act and Commission regulations each SRO retains ultimate responsibility for ensuring proper performance of its self-regulatory duties. 4 1 7 U.S.C. 1 *et seq.* (2000). 2 *See* Pub. L. 106-554, 114 Stat. 2763 (Dec. 21, 2000). 3 CFTC Regulation 170.15 requires each FCM to be a member of at least one RFA that is registered with the Commission pursuant to section 17 of the Act. Commission regulations referred to herein may be found at 17 CFR Ch. I (2003). 4 DSROs also monitor compliance in the areas of sales practice, recordkeeping, and anti-money laundering protections. Any two or more SROs may propose to enter into an agreement to effectuate a DSRO plan but such a plan may not be implemented unless and until the Commission, following appropriate notice and opportunity for public comment, approves the plan (in whole or in part and as submitted or as modified according to the Commission's direction). 5 The Commission also may, after appropriate notice and opportunity for hearing, withdraw its approval of a plan (in whole or in part) that it has previously approved if, in the Commission's determination, the plan (or part) no longer adequately effectuates the purposes of the Act or Commission regulations. 6 5 Regulation 1.52(g) states: After appropriate notice and opportunity for comment, the Commission may, by written notice, approve such a plan, or any part of the plan, if it finds that the plan, or any part of it:

(1)Is necessary or appropriate to serve the public interest;

(2)Is for the protection and in the interest of customers;

(3)Reduces multiple monitoring and auditing for compliance with the minimum financial rules of the [SROs] submitting the plan for any [FCM or IB that] is a member of more than one [SRO];

(4)Reduces multiple reporting of the financial information necessitated by such minimum financial and related reporting requirements by any [FCM or IB that] is a member of more than one [SRO];

(5)Fosters cooperation and coordination among the contract markets; and

(6)Does not hinder the development of [an RFA] under [S]ection 17 of the Act. 6 *See* Regulation 1.52(i). In 1984, a number of SROs entered into a Joint Audit Agreement (“1984 Agreement”) to effectuate a DSRO plan. 7 Proposed amendments to the 1984 Agreement were recently submitted for approval (“Proposed Agreement”). In accordance with § 1.52(g) of its regulations and in conjunction with its ongoing review of the self-regulatory system for futures markets, the Commission is publishing this notice to request public comment on the Proposed Agreement. 7 *See* 49 FR 28906 (Jul. 17, 1984) (approved in large part on Oct. 10, 1984 (“1984 Commission Letter”)). DATES: Comments must be received on or before May 27, 2004. ADDRESSES: Interested persons should submit their views and comments to Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. In addition, comments may be sent by facsimile transmission to

(202)418-5521, or by electronic mail to *secretary@cftc.gov.* Reference should be made to “Futures Market Self-Regulation”. This document also will be available for comment at *http://www.regulations.gov.* FOR FURTHER INFORMATION CONTACT: Thomas J. Smith, Associate Deputy Director and Chief Accountant, or Natalie A. Markman, Senior Special Counsel, Division of Clearing and Intermediary Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. Telephone

(202)418-5450. SUPPLEMENTARY INFORMATION: I. Background A. The DSRO System The Commission promulgated Regulation 1.52 in 1978 to permit cooperative self-regulatory arrangements such as the DSRO system that operates today. 8 Under CFTC regulations, the term “designated self-regulatory organization” means an SRO of which an FCM is a member or, if the FCM is a member of more than one SRO, the SRO to whom certain self-regulatory responsibilities are delegated pursuant to a DSRO agreement. 9 Notwithstanding the DSRO system, moreover, each SRO must establish and maintain appropriate procedures for monitoring the financial integrity of its member firms. 10 This fundamental obligation is reflected in the Act. 11 8 43 FR 39956, 39981-82 (Sep. 8, 1978). Although the regulation has been amended over the years, its fundamental requirements have remained substantially the same. 9 Originally, Regulation 1.3(ff) defined a DSRO to be an SRO: 10 Commission staff has provided detailed guidance on conducting an effective surveillance program. *See* Division of Trading and Markets Financial and Segregation Interpretation No. 4-1—Advisory Interpretation for Self-Regulatory Organization Surveillance over Members' Compliance with Minimum Financial, Segregation, Reporting, and Related Recordkeeping Requirements, 1 Comm. Fut. L. Rep.

(CCH)¶ 7114A at ¶ 43 (Jul. 29, 1985). 11 Both trading facilities and clearing organizations have important self-regulatory obligations under the Act. Core Principle 2 requires each DCM to monitor and enforce compliance with its rules. Core Principle 11 further requires each DCM to establish and enforce rules to ensure the financial integrity of FCMs and IBs and the protection of customer funds. 7 U.S.C. 7(d)(2) and (11). Core Principle H requires each DCO to monitor and enforce its rules, and the rules of a clearing organization focus extensively on issues of financial integrity. Moreover, Core Principle C requires each DCO to establish appropriate continuing eligibility standards (including appropriate minimum financial requirements) for its members and participants, and Core Principle M directs each DCO to enter into all appropriate and applicable information-sharing agreements and to use relevant information obtained thereby in carrying out its risk management program. 7 U.S.C. 7a-1(c)(2)(C), (H), and (M); *see also,* DTEF Registration Criterion 4, 7 U.S.C. 7a(c)(4); DTEF Core Principle 2, 7 U.S.C. 7a(d)(2); and Section 17(b)(4) of the Act (financial responsibility standards for RFA members), 7 U.S.C. 21(b)(4). Of which [an FCM] is a member or, if the [FCM] is a member of more than one [SRO] and such [FCM] is the subject of an approved plan under § 1.52, then [an SRO] delegated the responsibility by such a plan for monitoring and auditing such [FCM] for compliance with the minimum financial and related reporting requirements of the [SROs] of which the [FCM] is a member, and for receiving the financial reports necessitated by such minimum financial and related reporting requirements from such [FCM]. 43 FR at 39967. Regulation 1.3(ff) subsequently has been amended to include introducing brokers (“IBs”) and leverage transaction merchants. The 1984 Agreement created a Joint Audit Committee (“JAC” or “Committee”) made up of one representative appointed by each of the parties to the agreement. 12 Currently, if an FCM is a member of a single DCM among a group of certain DCMs that are long-time JAC members, then that DCM serves as DSRO for such firm. If an FCM is a member of more than one DCM within that group, then the Committee designates one of those DCMs to act as the firm's DSRO. If an FCM is not a member of one of the DCMs within that group, then NFA acts as the DSRO for such FCM. 12 The parties to the 1984 Agreement were: the Board of Trade of the City of Chicago (”CBOT”); Board of Trade of Kansas City (“KCBOT”); Chicago Mercantile Exchange (“CME”); Chicago Rice and Cotton Exchange; Coffee, Sugar & Cocoa Exchange, Inc. (“CSCE”); Commodity Exchange, Inc. (“COMEX”); MidAmerica Commodity Exchange; Minneapolis Grain Exchange (“MGE”); New York Cotton Exchange (“NYCE”); New York Futures Exchange, Inc.; New York Mercantile Exchange (“NYMEX”); and NFA. Current JAC members are: the AMEX Commodities Corp.; BrokerTec Futures Exchange, LLC; CBOE Futures Exchange, LLC; CBOT; CME; CSCE; COMEX; Island Futures Exchange, LLC; KCBOT; Merchants' Exchange, LLC; MGE; NQLX, LLC; NFA; NYCE; NYMEX; OneChicago, LLC; Philadelphia Board of Trade; and U.S. Futures Exchange, LLC. Not all members, however, have been assigned DSRO responsibilities. In addition to allocating DSRO responsibilities among certain SROs, the Committee also oversees the design and implementation of the examination program utilized by those DSROs that maintain in-house examination staffs in their examinations of assigned firms. (The NFA has a comparable examination program that it utilizes in examining firms for which it has been assigned as DSRO and firms that it examines under contractual arrangements with other SROs.) The Committee also determines the minimum examination practices and procedures to be followed in the conduct of examinations. Committee members may share information with each other about the financial condition and risk exposures of FCMs but are under confidentiality restrictions with respect to sharing such information with other persons. 13 13 For example, Paragraph 8(b) of the 1984 Agreement does not permit a DSRO to share such information with any clearinghouse except the clearinghouse that clears transactions executed on the DSRO's trading facility. The proposed amendments, however, would permit a DSRO to share information about an FCM with any DCO of which the FCM is a member. B. Commission Review of the DSRO System CFTC Chairman James Newsome announced in May 2003 that the Commission would review “the roles, responsibilities, and capabilities of SROs in the context of market changes,” such as demutualization and increasing competition. 14 Chairman Newsome recognized that self-regulation “has been integral to the success of the futures markets” and stated that it is appropriate for the Commission “to ensure that the principles of objectivity, confidentiality, and consistency continue to be adhered to as well as they have always been in this business.” 15 14 Address by Chairman James E. Newsome at the Futures Industry Association Law and Compliance Luncheon (May 28, 2003), available at *<http://www.cftc.gov/opa/speeches03/opanewsm-40.htm>.* 15 In congressional testimony, Chairman Newsome explained that he initiated a review of the SRO system “not because there are any particular issues that have arisen; but given the number of changes that have taken place in the industry over the last 2 or 3 years of both the exchanges and the firms, we think it is prudent and responsible for the CFTC to take a look at SROs and to make sure that the same principles that applied when SROs were put into place[ ] apply now.” Commodity Futures Modernization Act: Hearings Before the Subcomm. on General Farm Commodities and Risk Management of the House Comm. on Agriculture, 108th Cong., 1st Sess. 6

(2003)(statement of James E. Newsome, Chairman, CFTC). In February 2004, the Commission issued a press release announcing several initiatives in connection with its ongoing review of self-regulation. 16 One such initiative is the examination of the DSRO system, including its cooperative agreements and programs. 17 The CFTC's Division of Clearing and Intermediary Oversight has been assessing the impact of changes in the futures industry, such as new entrants being designated as DCMs 18 and the CFMA's creation of a new registration category for DCOs, 19 upon the DSRO system and its examination programs. A timely review of the DSRO system will ensure that DSROs continue to meet the needs of the markets and their participants. Accordingly, staff is conducting a formal review of the DSRO system as administered by the JAC through its examination program, including assessment of:

(1)The governance and operation of the JAC; and

(2)the effectiveness of the JAC and NFA examination programs, and related programs (“Programs”). 16 CFTC Press Release 4890-04 (Feb. 6, 2004), available at *http://www.cftc.gov/opa/press04/opa4890-04.htm* . 17 In a related initiative, the Commission encouraged each SRO to reexamine its policies and procedures, training efforts, and day-to-day practices to confirm that there are adequate safeguards to prevent the inappropriate use of confidential information obtained by SROs during audits, investigations, or other self-regulatory activities. The Commission also encouraged SROs to publicize any safeguards so market participants would continue to have faith in the integrity of the self-regulatory process and to participate enthusiastically in it. 18 The Commission has designated seven new DCMs since passage of the CFMA. 19 The CFMA changed the manner in which clearing organizations are recognized and regulated under the Act, and granted the Commission explicit authority to regulate DCOs. *See* 7 U.S.C. 7a-1. Each DCO must comply with certain core principles to maintain its registration. In particular, Section 5b(c)(2)(H)—Core Principle H on rule enforcement—requires a DCO to “maintain adequate arrangements and resources for the effective monitoring and enforcement of compliance” with its rules and for resolving disputes and to “have the authority and ability to discipline, limit, suspend, or terminate a member's or participant's activities for violations” of its rules. The Commission invites comment on the Proposed Agreement, particularly with respect to the ability of the DSRO system to serve the public interest, reduce duplicative reporting and examination burdens on FCMs, strengthen customer protections, and foster cooperation and coordination among the markets. Some, but certainly not all, of the issues that the Commission may consider in its assessment of the Proposed Agreement include: 1. Membership criteria; 2. Decision-making processes and the limitation of voting eligibility on the bases of longevity and self-performance of examination services; 3. The process by which an FCM is assigned to a particular DSRO; 4. Delegation versus outsourcing of examination services; 5. Distinctions between RFAs and non-RFAs with respect to delegation and outsourcing issues; 6. Distinctions between DSRO responsibilities and SRO responsibilities; 7. The extent to which the Commission should review the JAC's governance and operation on a more routine, periodic basis; and 8. The general transparency of the DSRO system and its operation. 20 20 Commission staff receives and reviews the Programs on an annual basis, but has not in the past reviewed the Joint Audit Agreement except in response to the submission of a new agreement. In addition to the issues mentioned above, the Commission welcomes comment on any aspect of the DSRO system. The 1984 Agreement, 1984 Commission Letter, and the Proposed Agreement are available on the Commission's Web site at *http://www.cftc.gov* upon the issuance of this notice by the Commission. Copies also may be obtained from the Office of the Secretariat, Commodity Futures Trading Commission, 1155 21st Street, NW., Washington, DC 20581. Issued in Washington, DC, on April 7, 2004, by the Commission. Jean A. Webb, Secretary of the Commission. [FR Doc. 04-8235 Filed 4-9-04; 8:45 am]

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