Federal Register / Vol. 73, No. 130 / Monday, July 7, 2008 / Notices 38403 

the education, stewardship, and 

research goals of the reserve; and the 

plans for future land acquisition and 

facility development to support reserve 

operations. The reserve management 

goals and objectives can be categorized 

within the following five management 

challenges: Public use, habitat and 

species management, watershed land 

use, cultural preservation and 

interpretation, and global processes. 

These issues can be directly or 

indirectly linked to anthropogenic land 

use of increasing population densities 

accompanied by increasing 

development, recreation and economic 

pressures. 

The Guana Tolomato Matanzas 

Environmental Education Center is a 

notable addition since the last 

management plan and serves as the 

administrative, education, research, and 

stewardship facility for the northern 

component of the Reserve. The facility 

will provide an opportunity for further 

outreach to the community and serve as 

a center of excellence for regional 

science, education and stewardship 

forums. 

This management plan calls for a 

boundary expansion incorporating 8,865 

acres of publicly owned land in the 

southern component of the reserve. 

Approximately 4,166 acres of the FaverDykes State Park adding to the 1,333 

acres of Faver-Dykes State Park 

incorporated at designation. The 

additional park lands will provide new 

resources and allow for an extension of 

the existing partnership. Additionally, 

4,699 acres of the Matanzas State Forest 

will be added to the Reserve boundary. 

This property will be incorporated to 

further protect the last remaining 

undisturbed salt marsh within the 

Reserve and is part of a 16,000 acre 

continuous conservation corridor. This 

land is comprised 75% by upland pine 

and 25% by wetlands. The area serves 

as an important bird habitat and 

contains significant natural and cultural 

resources. These additions will bring 

the total Reserve acreage to 73,352 acres 

protected for long-term research, 

education and stewardship. 

FOR FURTHER INFORMATION CONTACT: 

Erica Seiden at (301) 563–1172 or Laurie 

McGilvray at (301) 563–1158 of NOAA’s 

National Ocean Service, Estuarine 

Reserves Division, 1305 East-West 

Highway, N/ORM5, 10th floor, Silver 

Spring, MD 20910. For copies of the 

Guana Tolomato Matanzas, FL 

Management Plan revision, visit http:// 

www.dep.state.fl.us/coastal/sites/gtm/ 

plan/. 

Dated: June 30, 2008. 

David M. Kennedy, 

Director, Office of Ocean and Coastal 

Resource Management National Oceanic and 

Atmospheric Administration. 

[FR Doc. E8–15351 Filed 7–3–08; 8:45 am] 

BILLING CODE 3510–08–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

National Estuarine Research Reserve 

System 

AGENCY: Estuarine Reserves Division, 

Office of Ocean and Coastal Resource 

Management, National Ocean Service, 

National Oceanic and Atmospheric 

Administration, U.S. Department of 

Commerce. 

ACTION: Notice of Public Comment 

Period for the Revised Management Plan 

for the Padilla Bay National Estuarine 

Research Reserve. 

SUMMARY: Notice is hereby given that 

the Estuarine Reserves Division, Office 

of Ocean and Coastal Resource 

Management, National Ocean Service, 

National Oceanic and Atmospheric 

Administration (NOAA), U.S. 

Department of Commerce is announcing 

a thirty day public comment period on 

the revised management plan for the 

Padilla Bay National Estuarine Research 

Reserve. 

The Padilla Bay National Estuarine 

Research Reserve is located in Skagit 

County, Washington. The Reserve was 

designated in 1980 pursuant to Section 

315 of the Coastal Zone Management 

Act of 1972, as amended, 16 U.S.C. 

1461. The reserve is revising their plan 

pursuant to 15 CFR. The submission of 

this revised plan sets a course for 

successful implementation of the goals 

and objectives of the reserve. New 

facilities, a focus on broad Puget Sound 

issues and climate change, and updated 

programmatic objectives are notable 

revisions to the previous approved 

management plan. 

The revised management plan 

outlines the administrative structure; 

the education, stewardship, and 

research goals of the reserve; and the 

plans for future land acquisition and 

facility development to support reserve 

operations. Since 2002, the reserve has 

added a coastal training program that 

delivers science-based information to 

key decision makers in Washington 

State. The reserve has realized nearly all 

aspects of the original plan and 

expanded its programs dramatically 

since the original plan. The reserve has 

completed major facility expansion and 

renovation projects that provide 

classrooms, lab space, exhibit space, 

dormitory, and office space. The reserve 

has expanded, but not yet completed, its 

ownership of in-holdings within its 

boundary and increased staff which 

have resulted in the implementation of 

research, education, stewardship, GIS, 

and volunteer activities at the reserve. 

This management plan calls for 

continued land acquisition within its 

boundaries from willing sellers, 

implementation of a habitat mapping 

and change plan, responsiveness to 

existing and emerging regional 

partnerships focusing on the 

management of Puget Sound, a focus on 

climate change within all reserve 

programs, implementation of the 

National Estuarine Research Reserve’s 

K–12 Estuarine Education Program and 

continued implementation of the 

graduate research fellowship, coastal 

training, and system-wide monitoring 

programs. 

FOR FURTHER INFORMATION CONTACT: 

Nina Garfield at (301) 563–1171 or 

Laurie McGilvray at (301) 563–1158 of 

NOAA’s National Ocean Service, 

Estuarine Reserves Division, 1305 EastWest Highway, N/ORM5, 10th floor, 

Silver Spring, MD 20910. For copies of 

the Padilla Bay Management Plan 

revision, visit http:// 

www.padillabay.gov/. 

Dated: June 30, 2008. 

David M. Kennedy, 

Director, Office of Ocean and Coastal 

Resource Management, National Oceanic and 

Atmospheric Administration. 

[FR Doc. E8–15362 Filed 7–3–08; 8:45 am] 

BILLING CODE 3510–08–P 

COMMODITY FUTURES TRADING 

COMMISSION 

Request To Exempt Certain Over-theCounter Swaps From Certain of the 

Requirements Imposed by 

Commission Regulation 35.2, Pursuant 

to the Authority in Section 4(C) of the 

Commodity Exchange Act 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of request for comment 

on exemption request. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’) is 

requesting comment on whether to 

exempt certain over-the-counter 

(‘‘OTC’’) swaps from certain of the 

requirements otherwise imposed by 

Commission Regulation 35.2. 

Specifically, the petitioners request 

authority to clear certain agricultural 

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38404 Federal Register / Vol. 73, No. 130 / Monday, July 7, 2008 / Notices 

1 7 U.S.C. 6(c). 

2A copy of the petition is available on the 

Commission’s Web site at http://www.CFTC.gov/. 

3The suite of OTC agricultural swap products 

that the CBOT proposes to list for clearing-only is 

comprised of corn basis swap contracts for the 

following regions: Northeastern Iowa, Northwestern 

Iowa, Southern Iowa, Eastern Nebraska, Eastern 

South Dakota, and Southern Minnesota; and corn, 

wheat, and soybean calendar swaps. 

4 17 CFR Part 35 (Commission regulations are 

hereinafter cited as ‘‘Reg. ll’’). 

5 Jurisdiction is retained for, among other things, 

provisions of the CEA proscribing fraud and 

manipulation. See Reg. 35.2. 

6Reg. 35.1(b)(1)(i). ‘‘Commodity’’ is defined in 

Section 1a(4) of the CEA to include a variety of 

specified agricultural products, ‘‘and all other goods 

and articles, except onions * * * and all services, 

rights, and interests in which contracts for future 

delivery are presently or in the future dealt in.’’

7See 58 FR 5587 (Jan. 22, 1993). 

8Pub. L. 106–554, 114 Stat. 2763 (2000). 

9See, e.g., CEA 2(d), (g) and (h). 

10Reg. 35.2(b). 

11Reg. 35.2(c). 

12The contracts that the CBOT proposes to list for 

clearing-only would, however, meet the 

requirements of Reg. 35.2(a) and (d) in that they 

would be entered into solely between eligible swap 

participants and executed OTC. 

13Reg. 35.2(d). 

14Section 4(c)(1) of the CEA, 7 U.S.C. 6(c)(1), 

provides in full that: 

In order to promote responsible economic or 

financial innovation and fair competition, the 

Commission by rule, regulation, or order, after 

notice and opportunity for hearing, may (on its own 

initiative or on application of any person, including 

any board of trade designated or registered as a 

contract market or derivatives transaction execution 

facility for transactions for future delivery in any 

commodity under section 7 of this title) exempt any 

agreement, contract, or transaction (or class thereof) 

that is otherwise subject to subsection (a) of this 

section (including any person or class of persons 

offering, entering into, rendering advice or 

rendering other services with respect to, the 

agreement, contract, or transaction), either 

unconditionally or on stated terms or conditions or 

for stated periods and either retroactively or 

prospectively, or both, from any of the requirements 

of subsection (a) of this section, or from any other 

provision of this chapter (except subparagraphs 

(c)(ii) and (D) of section 2(a)(1) of this title, except 

that the Commission and the Securities and 

Exchange Commission may by rule, regulation, or 

order jointly exclude any agreement, contract, or 

transaction from section 2(a)(1)(D) of this title), if 

the Commission determines that the exemption 

would be consistent with the public interest. 

15House Conf. Report No. 102–978, 1992 

U.S.C.C.A.N. 3179, 3213. 

swaps. This exemption has been 

requested by the Chicago Mercantile 

Exchange Inc. (‘‘CME’’), a registered 

derivatives clearing organization 

(‘‘DCO’’), and the Board of Trade of the 

City of Chicago, Inc. (‘‘CBOT’’), a 

designated contract market. Authority 

for extending this relief is found in 

Section 4(c) of the Commodity Exchange 

Act (‘‘CEA’’).1

DATES: Comments must be received on 

or before August 21, 2008. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov/http:// 

frwebgate.access.gpo/cgi-bin/leaving. 

Follow the instructions for submitting 

comments. 

• E-mail: secretary@cftc.gov. Include 

‘‘CME/CBOT Section 4(c) Petition’’ in 

the subject line of the message. 

• Fax: 202–418–5521. 

• Mail: Send to David A. Stawick, 

Secretary, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. 

• Courier: Same as mail above. 

All comments received will be posted 

without change to http:// 

www.CFTC.gov/. 

FOR FURTHER INFORMATION CONTACT: 

Sarah E. Josephson, Special Counsel, 

202–418–5684, sjosephson@cftc.gov, or 

Phyllis P. Dietz, Associate Director, 

202–418–5449, pdietz@cftc.gov, 

Division of Clearing and Intermediary 

Oversight, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1151 21st Street, NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

I. The CME/CBOT Petition 

CME, the DCO that provides clearing 

services for the CBOT, and the CBOT 

jointly submitted a request to the 

Commission for an exemptive order 

under Section 4(c) of the CEA.2 The 

order would grant CME approval to 

clear OTC corn basis swaps and corn, 

wheat, and soybean calendar swaps,3

and it would permit the CBOT to list 

those products for ‘‘clearing-only.’’ The 

contract size for the basis and calendar 

swap products will be the same as that 

for corn, wheat, and soybean futures—

5,000 bushels. However, each of the 

proposed cleared-only OTC products 

will be cash-settled, in contrast to the 

CBOT’s corn, wheat, and soybean 

futures contracts, which are physicallysettled. 

Part 35 of the Commission’s 

regulations 4 exempts swap agreements 

and eligible persons entering into such 

agreements from most provisions of the 

CEA.5 The term ‘‘swap agreement’’ is 

defined to include, among other types of 

agreements, a ‘‘basis swap’’ or a 

‘‘commodity swap.’’ 6 Part 35 was 

promulgated pursuant to authority 

conferred upon the Commission in 

Section 4(c) of the CEA to exempt 

certain transactions in order to promote 

innovation and competition.7 Various 

exemptions and exclusions were 

subsequently added to the CEA by the 

Commodity Futures Modernization Act 

of 2000 (‘‘CFMA’’),8 but none apply to 

agricultural contracts.9

Part 35 requires, among other things, 

that a swap agreement not be part of a 

fungible class of agreements that are 

standardized as to their material 

economic terms 10 and that the 

creditworthiness of any party having an 

interest under the agreement be a 

material consideration in entering into 

or negotiating the terms of the 

agreement.11 Under the arrangement 

proposed by CME and the CBOT, a 

cleared-only OTC contract could be 

offset by another cleared-only OTC 

contract. Thus, clearing of these OTC 

contracts would result in contracts that 

are fungible with other cleared-only 

contracts with equivalent terms. In 

addition, the creditworthiness of the 

counterparty would not be a 

consideration. Accordingly, the OTC 

contracts CME would clear would not 

satisfy all of the conditions of Part 35.12

However, Part 35 further permits ‘‘any 

person [to] apply to the Commission for 

exemption from any of the provisions of 

the Act * * * for other arrangements or 

facilities.’’ 13 CME and the CBOT have 

petitioned the Commission for an order 

under Section 4(c) of the CEA that 

would exempt cleared-only OTC swaps 

involving corn, wheat, or soybeans to 

the same extent as contracts that are 

exempt pursuant to Part 35 of the 

Commission’s regulations. 

II. Section 4(c) of the Commodity 

Exchange Act 

Section 4(c)(1) of the CEA empowers 

the Commission to ‘‘promote 

responsible economic or financial 

innovation and fair competition’’ by 

exempting any transaction or class of 

transactions from any of the provisions 

of the CEA (subject to exceptions not 

relevant here) where the Commission 

determines that the exemption would be 

consistent with the public interest.14

The Commission may grant such an 

exemption by rule, regulation, or order, 

after notice and opportunity for hearing, 

and may do so on application of any 

person or on its own initiative. 

In enacting Section 4(c), Congress 

noted that the goal of the provision ‘‘is 

to give the Commission a means of 

providing certainty and stability to 

existing and emerging markets so that 

financial innovation and market 

development can proceed in an effective 

and competitive manner.’’ 15 Permitting 

the clearing of OTC corn, wheat, and 

soybean swaps by CME may foster both 

financial innovation and competition. It 

may benefit the marketplace by 

providing market participants the ability 

to combine flexible negotiation with 

central counterparty guarantees and 

capital efficiencies. In addition, the 

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Federal Register / Vol. 73, No. 130 / Monday, July 7, 2008 / Notices 38405 

16Section 4(c)(2) of the CEA, 7 U.S.C. 6(c)(2), 

provides in full that: 

The Commission shall not grant any exemption 

under paragraph (1) from any of the requirements 

of subsection (a) of this section unless the 

Commission determines that—

(A) the requirement should not be applied to the 

agreement, contract, or transaction for which the 

exemption is sought and that the exemption would 

be consistent with the public interest and the 

purposes of this Act; and 

(B) the agreement, contract, or transaction—

(i) will be entered into solely between appropriate 

persons; and 

(ii) will not have a material adverse effect on the 

ability of the Commission or any contract market or 

derivatives transaction execution facility to 

discharge its regulatory or self-regulatory duties 

under this Act. 

17Section 3(b) of the CEA, 7 U.S.C. 5(b). See also 

Section 4(c)(1) of the CEA, 7 U.S.C. 6(c)(1) (purpose 

of exemptions is ‘‘to promote responsible economic 

or financial innovation and fair competition’’). 

18 44 U.S.C. 3507(d). 

19 7 U.S.C. 19(a). 

CBOT has represented that it expects 

that the proposed cleared-only OTC 

corn basis and calendar swaps will be 

a complement to the CBOT’s corn 

futures and will enable corn suppliers 

and users, including participants in the 

ethanol industry, to manage volatile 

basis risk while realizing the benefits of 

centralized clearing. Similarly, the 

CBOT has stated that it expects that its 

proposed cleared-only OTC wheat and 

soybean calendar swaps will 

complement wheat and soybean futures, 

respectively, and will result in similar 

benefits. 

The Commission is requesting 

comment on whether it should exempt 

the OTC corn basis swaps and corn, 

wheat, and soybean calendar swaps that 

are proposed to be cleared by CME and 

listed by the CBOT, as described above, 

to the same extent as are other contracts 

that are exempt pursuant to Part 35 of 

the Commission’s regulations. 

Section 4(c)(2) provides that the 

Commission may grant an exemption 

only when it determines that the 

requirements for which the exemption 

is being provided should not be applied 

to the agreements, contracts, or 

transactions at issue, and the exemption 

is consistent with the public interest 

and the purposes of the CEA; that the 

agreements, contracts, or transactions 

will be entered into solely between 

appropriate persons; and that the 

exemption will not have a material 

adverse effect on the ability of the 

Commission or any contract market or 

derivatives transaction execution 

facility to discharge its regulatory or 

self-regulatory responsibilities under the 

CEA.16

The purposes of the CEA include 

‘‘promot[ing] responsible innovation 

and fair competition among boards of 

trade, other markets, and market 

participants.’’ 17 It may be consistent 

with these and the other purposes of the 

CEA, and with the public interest, for 

the cleared-only contracts described 

herein to be exempt as are other 

contracts under Part 35 of the 

Commission’s regulations. However, the 

exception of agricultural commodities 

from the exemptions and exclusions 

provided under the CFMA for OTC 

transactions may be relevant to the 

analysis. Accordingly, the Commission 

is requesting comment as to whether an 

exemption from the requirements of the 

CEA should be granted in the context of 

these transactions. 

In light of the above, the Commission 

also is requesting comment as to 

whether these exemptions will affect its 

ability to discharge its regulatory 

responsibilities under the CEA, or with 

the self-regulatory duties of any 

designated contract market. 

III. Request for Comment 

The Commission requests comment 

on all aspects of the issues presented by 

this exemption request. 

IV. Related Matters 

A. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(‘‘PRA’’) 18 imposes certain 

requirements on federal agencies 

(including the Commission) in 

connection with their conducting or 

sponsoring any collection of 

information as defined by the PRA. The 

exemption would not, if approved, 

require a new collection of information 

from any entities that would be subject 

to the exemption. 

B. Cost-Benefit Analysis 

Section 15(a) of the CEA,19 requires 

the Commission to consider the costs 

and benefits of its action before issuing 

an order under the CEA. By its terms, 

Section 15(a) does not require the 

Commission to quantify the costs and 

benefits of an order or to determine 

whether the benefits of the order 

outweigh its costs. Rather, Section 15(a) 

simply requires the Commission to 

‘‘consider the costs and benefits’’ of its 

action. 

Section 15(a) of the CEA further 

specifies that costs and benefits shall be 

evaluated in light of five broad areas of 

market and public concern: Protection 

of market participants and the public; 

efficiency, competitiveness, and 

financial integrity of futures markets; 

price discovery; sound risk management 

practices; and other public interest 

considerations. Accordingly, the 

Commission could in its discretion give 

greater weight to any one of the five 

enumerated areas and could in its 

discretion determine that, 

notwithstanding its costs, a particular 

order was necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or to 

accomplish any of the purposes of the 

CEA. 

The Commission is considering the 

costs and benefits of an exemptive order 

in light of the specific provisions of 

Section 15(a) of the CEA, as follows: 

1. Protection of market participants 

and the public. The contracts that are 

the subject of the exemptive request will 

only be entered into by persons who are 

‘‘appropriate persons’’ as set forth in 

Section 4(c) of the Act. 

2. Efficiency, competition, and 

financial integrity. Extending the 

exemption granted under Part 35 to 

these OTC swap agreements to allow 

them to be cleared may promote 

liquidity and transparency in the 

markets for OTC derivatives on corn, 

wheat, and soybeans, as well as futures 

on those commodities. Extending the 

exemption also may promote financial 

integrity by providing the benefits of 

clearing to these OTC markets. 

3. Price discovery. Price discovery 

may be enhanced through market 

competition. 

4. Sound risk management practices. 

Clearing of OTC transactions may foster 

risk management by the participant 

counterparties. CME’s risk management 

practices in clearing these transactions 

would be subject to the Commission’s 

supervision and oversight. 

5. Other public interest 

considerations. The requested 

exemption may encourage market 

competition in agricultural derivatives 

products without unnecessary 

regulatory burden. 

After considering these factors, the 

Commission has determined to seek 

comment on the exemption request as 

discussed above. The Commission also 

invites public comment on its 

application of the cost-benefit provision. 

Issued in Washington, DC, on June 30, 

2008 by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. E8–15274 Filed 7–3–08; 8:45 am] 

BILLING CODE 6351–01–P 

mstockstill on PROD1PC66 with NOTICES