[Federal Register Volume 73, Number 244 (Thursday, December 18, 2008)]
[Rules and Regulations]
[Pages 77432-77472]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-29677]



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Part V





Department of Justice





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28 CFR Part 75



Revised Regulations for Records Relating to Visual Depictions of 
Sexually Explicit Conduct; Inspection of Records Relating to Depiction 
of Simulated Sexually Explicit Performance; Final Rule

Federal Register / Vol. 73, No. 244 / Thursday, December 18, 2008 / 
Rules and Regulations

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DEPARTMENT OF JUSTICE

28 CFR Part 75

[Docket No. CRM 104; CRM 105; AG Order No. 3025-2008----]
RIN 1105-AB18; RIN 1105-AB19


Revised Regulations for Records Relating to Visual Depictions of 
Sexually Explicit Conduct; Inspection of Records Relating to Depiction 
of Simulated Sexually Explicit Performance

AGENCY: Department of Justice.

ACTION: Final rule.

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SUMMARY: This rule finalizes two proposed rules and amends the record-
keeping, labeling, and inspection requirements to account for changes 
in the underlying statute made by Congress in enacting the Adam Walsh 
Child Protection and Safety Act of 2006.

DATES: This rule is effective January 20, 2009. Compliance date: The 
requirements of this rule apply to producers of visual depictions of 
the lascivious exhibition of the genitals or pubic area of a person and 
producers of simulated sexually explicit conduct as of March 18, 2009.

FOR FURTHER INFORMATION CONTACT: Andrew Oosterbaan, Chief, Child 
Exploitation and Obscenity section, Criminal Division, United States 
Department of Justice, Washington, DC 20530; (202) 514-5780. This is 
not a toll-free number.

SUPPLEMENTARY INFORMATION: The Child Protection and Obscenity 
Enforcement Act of 1988, Public Law 100-690, codified at 18 U.S.C. 
2257, imposes certain name- and age-verification, record-keeping, and 
labeling requirements on producers of visual depictions of actual human 
beings engaged in sexually explicit conduct. Specifically, section 2257 
requires producers of such material to ``ascertain, by examination of 
an identification document containing such information, the performer's 
name and date of birth,'' to ``ascertain any name, other than the 
performer's present and correct name, ever used by the performer 
including maiden name, alias, nickname, stage, or professional name,'' 
and to record and maintain this information. 18 U.S.C. 2257(b). 
Violations of these record-keeping requirements are criminal offenses 
punishable by imprisonment of not more than five years for a first 
offense and not more than 10 years for subsequent offenses. See id. 
2257(i). Any matter containing such visual depictions must be labeled 
with a statement indicating where the records are located, and those 
records are subject to inspection by the government. See id. 2257(c), 
(e). These provisions supplement the federal statutory provisions 
criminalizing the production and distribution of materials visually 
depicting minors engaged in sexually explicit conduct. See id. 2251, 
2252.
    The regulations in 28 CFR part 75 implement section 2257. On May 
24, 2005, the Department of Justice (``the Department'') published a 
final rule that updated those regulations to account for changes in 
technology, particularly the Internet, and to implement the 
Prosecutorial Remedies and Other Tools to End the Exploitation of 
Children Today (PROTECT) Act of 2003, Public Law 108-21. See Inspection 
of Records Relating to Depiction of Sexually Explicit Performances, 70 
FR 29607 (May 24, 2005) (CRM 103; RIN 1105-AB05).
    On July 27, 2006, President George W. Bush signed into law the Adam 
Walsh Child Protection and Safety Act, Public Law 109-248 (``the Adam 
Walsh Act'' or ``the Act''). As described in more detail below, the Act 
made a number of changes to section 2257 and added section 2257A to 
title 18, imposing similar record-keeping requirements on producers of 
visual depictions of simulated sexually explicit conduct. Furthermore, 
the Act created a certification regime for producers of such conduct 
and for producers of depictions of one type of actual sexually explicit 
conduct to exempt them from the detailed regulatory requirements.
    This final rule amends the regulations in part 75 to comport with 
these statutory changes. As described in more detail below, the 
Department published two separate proposed rules, one to implement the 
revision to section 2257 and the other to implement the requirements of 
section 2257A with regard to simulated sexually explicit conduct and 
its certification regime. This rule finalizes both proposed rules in 
one rulemaking in order to simplify and coordinate implementation of 
the Adam Walsh Act. Most importantly, this approach ensures that the 
requirements of revised section 2257 go into effect in coordination 
with the effectiveness of the certification regime applicable to it. 
The final rule also makes numerous changes to the proposed rules that 
will simplify the regulatory process and lessen the burden on 
businesses covered by the Act.

Background

    Protecting children from sexual exploitation is one of government's 
most important responsibilities. Children are incapable of giving 
voluntary and knowing consent to perform in pornography. Furthermore, 
children often are forced to engage in sexually explicit conduct for 
the purpose of producing pornography. For these reasons, visual 
depictions of sexually explicit conduct that involve persons under the 
age of 18 constitute child pornography under federal law. See 18 U.S.C. 
2256(8). Producers of such depictions are subject to appropriately 
severe penalties. See id. 2251.
    Establishing the identity of every performer in a depiction of 
sexually explicit conduct is critical to ensuring that no performer is 
a minor and that, hence, the depiction is not child pornography. 
Section 2257 has facilitated identification and age-verification 
efforts by requiring producers to ascertain the identity and age of 
performers in their depictions and to maintain records evidencing such 
compliance. Producers are less likely as a result of these requirements 
to exploit children and to create child pornography through 
carelessness, recklessness, or deliberate indifference. As for those 
who intentionally produce material depicting minors engaged in sexually 
explicit conduct, the statute and regulations provide an additional 
basis for prosecuting such individuals besides the applicable child-
exploitation statutes. In addition, the statute and the regulations 
``deprive child pornographers of access to commercial markets by 
requiring secondary producers to inspect (and keep a record of) the 
primary producers' proof that the persons depicted were adults at the 
time they were photographed or videotaped.'' Am. Library Ass'n v. Reno, 
33 F.3d 78, 86 (D.C. Cir. 1994).
    In the Adam Walsh Act, Congress filled two gaps in section 2257 by 
amending it to cover lascivious exhibition of the genitals or pubic 
area (``lascivious exhibition'') and by enacting section 2257A to cover 
simulated sexually explicit conduct, while at the same time creating an 
exception from these new record-keeping requirements in certain 
circumstances.
    With regard to lascivious exhibition, the Act corrected an anomaly 
in the definition of ``sexually explicit conduct'' to which section 
2257's requirements apply. Prior to the enactment of the Act, section 
2257 referenced the definition of ``sexually explicit conduct'' for 
purposes of Chapter 110 of the U.S. Code in section 2256(2)(A) and 
listed four of the five categories of conduct included in that section. 
Section 2257 did not include ``lascivious exhibition of the genitals or

[[Page 77433]]

pubic area of any person.'' 18 U.S.C. 2256(2)(A)(v). The Act revised 
section 2257 to include that category along with the others. See Adam 
Walsh Act, Public Law 109-248 Sec.  502(a)(4). Because part 75 defines 
``sexually explicit conduct'' by referencing that term in section 
2256(2)(A), part 75 will apply to depictions of ``lascivious 
exhibition.''
    With regard to simulated sexually explicit conduct, it is crucial 
to note that Chapter 110 of title 18 of the U.S. Code (``Sexual 
Exploitation and Other Abuse of Children'') already covers both actual 
and simulated sexually explicit conduct. Specifically, it defines 
``sexually explicit conduct'' as:

    (A) * * * actual or simulated--(i) sexual intercourse, including 
genital-genital, oral-genital, anal-genital, or oral-anal, whether 
between persons of the same or opposite sex; (ii) bestiality; (iii) 
masturbation; (iv) sadistic or masochistic abuse; or (v) lascivious 
exhibition of the genitals or pubic area of any person;
    (B) For purposes of subsection 8(B) of this section [part of the 
definition of ``child pornography''], ``sexually explicit conduct'' 
means--(i) graphic sexual intercourse, including genital-genital, 
oral-genital, anal-genital, or oral-anal, whether between persons of 
the same or opposite sex, or lascivious simulated sexual intercourse 
where the genitals, breast, or pubic area of any person is 
exhibited; (ii) graphic or lascivious simulated; (I) bestiality; 
(II) masturbation; or (III) sadistic or masochistic abuse; or (iii) 
graphic or simulated lascivious exhibition of the genitals or pubic 
area of any person * * *.

18 U.S.C. 2256(2) (emphases added).
    Numerous States' child-exploitation statutes refer to both 
simulated and actual sexual conduct. See Alaska Stat. Sec.  11.41.455; 
Ariz. Rev. Stat. Sec.  13-3551; Ark. Code Ann. Sec.  5-27-302; Cal. 
Penal Code Sec.  311.11; Colo. Rev. Stat. Sec.  18-6-403; Conn. Gen. 
Stat. Sec.  53a-193; Fla. Stat. Sec.  827.071; Ga. Code Ann. Sec.  16-
12-100; Idaho Code Ann. Sec.  18-1507; 720 Ill. Comp. Stat. Ann. 5/11-
20.1; Kan. Stat. Ann. Sec.  21-3516; Ky. Rev. Stat. Ann. Sec.  531.300; 
La. Rev. Stat. Ann. Sec.  14:81.1; Mass. Ann. Laws ch. 272 Sec.  29C; 
Mich. Comp. Laws Serv. Sec.  750.145c; Minn. Stat. Sec.  617.246; Miss. 
Code Ann. Sec.  97-5-33; Mo. Rev. Stat. Sec.  573.010; Mont. Code Ann. 
Sec.  45-5-625; Nev. Rev. Stat. Sec.  200.725; N.H. Rev. Stat. Ann. 
Sec.  649-A:2; N.M. Stat. Ann. Sec.  30-6A-3; N.Y. Penal Sec.  263.00; 
N.D. Cent. Code Sec.  12.1-27.2-01; Okla. Stat. tit. 21 Sec.  1024.1; 
Or. Rev. Stat. Sec.  163.665; S.D. Codified Laws Sec.  22-24A-2 to -3; 
Tenn. Code Ann. Sec.  39-17-1003; Tex. Penal Code Ann. Sec.  43.25; 
Utah Code Ann. Sec.  76-5a-2; Va. Code Ann. Sec.  18.2-390; Wash. Rev. 
Code Sec.  9.68A.011; W. Va. Code Sec.  61-8C-1; Wis. Stat. Sec.  
948.01; Wyo. Stat. Ann. Sec.  6-4-303. Accordingly, ``simulated'' in 
the context of sexually explicit conduct is neither a novel nor an 
uncommon term.
    These statutes recognize that a child may be harmed both physically 
and psychologically in the production of visual depictions of simulated 
sexually explicit conduct, even if no sexually explicit conduct 
actually takes place. Furthermore, producers of visual depictions of 
actual sexually explicit conduct often substitute a visual depiction of 
simulated sexually explicit conduct (so-called ``soft-core'' 
pornography) in place of the actual sexually explicit conduct; then the 
soft-core pornography is often distributed more widely than the 
unedited version of the same production. In such cases, the protection 
of children from exploitation in the production of a visual depiction 
of actual sexually explicit conduct necessitates that producers of 
visual depictions of simulated sexually explicit conduct also be 
required to maintain records and label their products.
    Sections 2257 and 2257A thus operate in tandem to protect children 
from exploitation in visual depictions of sexually explicit conduct. 
Part 75 implementing those statutes has undergone significant public 
comment, and several courts have found it to be a constitutional 
exercise of governmental authority. See Am. Library Ass'n v. Reno, 33 
F.3d 78 (D.C. Cir. 1994); Free Speech Coalition v. Gonzales, 406 F. 
Supp. 2d 1196 (D. Colo. 2005) (``Free Speech I'') (upholding certain 
aspects of part 75, although preliminarily enjoining others); Free 
Speech Coalition v. Gonzales, 483 F. Supp. 2d 1069 (D. Colo. 2007) 
(``Free Speech II''); but see also Connection Distrib. Co. v. Gonzales, 
2006 WL 1305089, 2006 U.S. Dist. LEXIS 29506 (N.D. Ohio, May 10, 2006) 
(upholding the constitutionality of part 75), rev'd and remanded sub 
nom. Connection Distrib. Co. v. Keisler, 505 F.3d 545 (6th Cir. 2007) 
(striking down section 2257, but not directly addressing the 
constitutionality of part 75), vacated and rehearing en banc granted 
sub nom. Connection Distrib. Co. v. Mukasey, 2008 U.S. App. LEXIS 9032 
(6th Cir. Apr. 10, 2008). Although one court invalidated part 75 as 
ultra vires to the extent it regulated those whose activity ``does not 
involve hiring, contracting for[,] managing, or otherwise arranging for 
the participation of the performers depicted,'' see Sundance Assocs., 
Inc. v. Reno, 139 F.3d 804, 808 (10th Cir. 1998) (quotation marks 
omitted; alteration in original), Congress subsequently amended the 
statute, see Adam Walsh Act, Public Law 109-248 section 502(a)(4), and 
adopted the Attorney General's interpretation of section 2257. Cf. Free 
Speech Coalition II, 483 F. Supp. 2d at 1075 (suggesting that the 
enactment of section 502 of the Act moots the plaintiff's ultra vires 
challenge to part 75).

The Proposed Rules

Revisions to Section 2257
    The Department issued a proposed rule to implement the revisions to 
section 2257 on July 12, 2007. See Revised Regulations for Records 
Relating to Visual Depictions of Sexually Explicit Conduct, 72 FR 38033 
(July 12, 2007) (CRM 104; RIN 1105-AB18). The proposed rule reflected 
the change to the definition of ``actual sexually explicit conduct'' to 
include lascivious exhibition by adding to the definitional section of 
the regulations at Sec.  75.1(n). Although proposed part 75 applied to 
the ``lascivious exhibition of the genitals or pubic area of a 
person,'' it did not define this term beyond the language of section 
2256(2)(A). Case law provides guidance as to the types of depictions 
that federal courts have considered to be lascivious exhibition of the 
genitals or pubic area, and the Department will rely on such precedent 
in the context of section 2257 investigations and prosecutions.
    The leading case is United States v. Dost, 636 F. Supp. 828 (S.D. 
Cal. 1986), aff'd sub nom. United States v. Weigand, 812 F.2d 1239 (9th 
Cir. 1987), which provides a list of factors for determining whether a 
visual depiction constitutes lascivious exhibition:
    (1) Whether the focal point of the visual depiction is on the 
child's genitalia or pubic area;
    (2) whether the setting of the visual depiction is sexually 
suggestive, i.e., in a place or pose generally associated with sexual 
activity;
    (3) whether the child is depicted in an unnatural pose, or in 
inappropriate attire, considering the age of the child;
    (4) whether the child is fully or partially clothed, or nude;
    (5) whether the visual depiction suggests sexual coyness or a 
willingness to engage in sexual activity;
    (6) whether the visual depiction is intended or designed to elicit 
a sexual response in the viewer.
    Dost, 636 F. Supp. at 832. Several courts of appeals have relied 
upon the Dost factors. See, e.g., United States v. Grimes, 244 F.3d 375 
(5th Cir. 2001); United States v. Knox, 32 F.3d 733 (3d Cir. 1994); 
United States v. Wolf, 890 F.2d 241 (10th Cir. 1989).
    The July 2007 proposed rule noted that, although these factors have 
been used to determine whether visual

[[Page 77434]]

depictions of children constituted lascivious exhibition for purposes 
of criminal prosecution for violations of sections 2251, 2252, and 
2252A of title 18, only the third factor is necessarily dependent on 
the age of the person depicted. The other factors provide guidance as 
to the types of depictions that would constitute lascivious exhibition 
for purposes of section 2257 and part 75, as well, even though those 
sections apply to any performers regardless of age.
    The July 2007 proposed rule noted that the applicability of part 75 
was to be prospective from the effective date of the Adam Walsh Act. It 
therefore contemplated that the rule applied only to depictions whose 
original production date was on or after July 27, 2006. That is, under 
the proposed rule, records would not be required to be maintained 
either by a primary producer or by a secondary producer for a visual 
depiction of lascivious exhibition, the original production date of 
which was prior to July 27, 2006. In the case of a secondary producer, 
the proposed rule stated that even if the secondary producer 
``produces'' (as defined in the regulation) such a depiction on or 
after July 27, 2006, he need not maintain records if the original 
production date of the depiction is prior to that date.
    Second, the Adam Walsh Act revised the exclusions in the statute 
for the operations of Internet companies. Specifically, the Act amended 
section 2257 by excluding from the definition of ``produces'' the 
``provision of a telecommunications service, or of an Internet access 
service or Internet information location tool * * * or the 
transmission, storage, retrieval, hosting, formatting, or translation 
(or any combination thereof) of a communication, without selection or 
alteration of the content of the communication.'' These exclusions are 
based on the definitions in section 231 of the Communications Act of 
1934, 47 U.S.C. 231.
    Third, the Adam Walsh Act made several changes in the terminology 
of the statute. In subsection 2257(e)(1), it added at the end the 
following: ``In this paragraph, the term `copy' includes every page of 
a Web site on which matter described in subsection (a) appears.'' That 
change was reflected in the proposed rule at Sec. Sec.  75.1(e)(3), 
75.6(a), and 75.8(d). The change materially affects the regulation's 
labeling requirement as applied to Web sites. Section 75.8(d) of the 
current regulations permits a producer of a computer site of service or 
Web site to affix the label stating where the records required under 
the regulations are located ``on its homepage, any known major entry 
points, or principal URL (including the principal URL of a subdomain), 
or in a separate window that opens upon the viewer's clicking a 
hypertext link that states, `18 U.S.C. 2257 RecordKeeping Requirements 
Compliance Statement.' '' Because of the change in the statute, the 
proposed rule eliminated that portion of the current regulations. The 
proposed rule required, per the statute, that the statement describing 
the location of the records required by this part be affixed to every 
page of a Web site (controlled by the producer) on which visual 
depictions of sexually explicit conduct appear.
    Finally, the Adam Walsh Act confirmed that the statute applies to 
secondary producers as currently (and previously) defined in the 
regulations. Specifically, the Act defines any of the following 
activities as ``produces'' for purposes of section 2257:

    (i) Actually filming, videotaping, photographing, creating a 
picture, digital image, or digitally- or computer-manipulated image 
of an actual human being;
    (ii) Digitizing an image[ ] of a visual depiction of sexually 
explicit conduct; or, assembling, manufacturing, publishing, 
duplicating, reproducing, or reissuing a book, magazine, periodical, 
film, videotape, digital image, or picture, or other matter intended 
for commercial distribution, that contains a visual depiction of 
sexually explicit conduct; or
    (iii) Inserting on a computer site or service a digital image 
of, or otherwise managing the sexually explicit content[ ] of a 
computer site or service that contains a visual depiction of, 
sexually explicit conduct * * *

18 U.S.C. 2257(h)(2)(A).
    It excludes from the definition of ``produces,'' however, the 
following activities, in pertinent part:

    (i) Photo or film processing, including digitization of 
previously existing visual depictions, as part of a commercial 
enterprise, with no other commercial interest in the sexually 
explicit material, printing, and video duplication.
    (ii) Distribution;
    (iii) Any activity, other than those activities identified in 
subparagraph (A), that does not involve the hiring, contracting for, 
managing, or otherwise arranging for the participation of the 
depicted performers * * *

Id. 2257(h)(2)(B), as amended.
    This language replaces the previous definition of ``produces'' in 
the statute, which stated, in pertinent part, as follows:

    [T]he term ``produces'' means to produce, manufacture, or 
publish any book, magazine, periodical, film, video tape, computer 
generated image, digital image, or picture, or other similar matter 
and includes the duplication, reproduction, or reissuing of any such 
matter, but does not include mere distribution or any other activity 
which does not involve hiring, contracting for managing, or 
otherwise arranging for the participation of the performers depicted 
* * *

18 U.S.C. 2257(h) (2000 ed. & Supp. V) (former version).
    In enacting the revised language, Congress upheld the Department's 
consistently held position that the rule's requirements for secondary 
producers have been in effect since the rule's original publication. As 
explained by the sponsor of the Act in the House of Representatives:

    Congress previously enacted the PROTECT Act of 2003 against the 
background of Department of Justice regulations applying section 
2257 to both primary and secondary producers. That fact, along with 
the Act's specific reference to the regulatory definition that 
existed at the time, reflected Congress's agreement with the 
Department of Justice's view that it already had the authority to 
regulate secondary procedures [sic] under the applicable law.
    A federal court in Colorado, however, recently enjoined the 
Department from enforcing the statute against secondary producers, 
relying on an earlier Tenth Circuit precedent holding that Congress 
had not authorized the Department to regulate secondary producers. 
These decisions conflicted with an earlier DC Circuit decision 
upholding Congress's authority to regulate secondary producers. 
Section 502 of the bill is meant to eliminate any doubt that section 
2257 applies both to primary and secondary producers, and to reflect 
Congress's agreement with the regulatory approach adopted by the 
Department of Justice in enforcing the statute.

152 Cong. Rec. H5705, H5725 (2006) (statement of Rep. Pence).
    Congress thus rejected the interpretation adopted by the court in 
Sundance Associates v. Reno, 139 F.3d 804 (10th Cir. 1998), in favor of 
the DC Circuit's decision upholding the application of the statute to 
secondary producers. Am. Library Ass'n v. Reno, 33 F.3d 78 (D.C. Cir. 
1994). In upholding the constitutionality of the secondary-producer 
requirements, the D.C. Circuit both recognized the importance of these 
requirements and effectively rejected the argument that Congress lacked 
the authority to regulate secondary producers.
    In accordance with the current law, the proposed rule retained July 
3, 1995, as the effective date of the rule's requirements for secondary 
producers. (The current regulations, published in 2005, adopted July 3, 
1995, as the effective date of enforcement of section 2257 based on the 
court's order in American Library Association v. Reno, No. 91-0394 (SS) 
(D.D.C. July 28, 1995). The one exception was that the proposed rule 
would not have penalized

[[Page 77435]]

secondary producers for failing to maintain required records in 
connection with those acts of production that occurred prior to the 
effective date of the Act. While the law would permit the Department to 
apply the statute and regulations to actions that occurred prior to 
that date, the Department determined that the proposed rule would not 
apply in such circumstances to avoid any conceivable ex post facto 
concern.
    In addition to implementing the changes in the statute described 
above, the July 2007 proposed rule clarified several other issues. 
First, it clarified that primary producers may redact non-essential 
information from copies of records provided to secondary producers, 
including addresses, phone numbers, social security numbers, and other 
information not necessary to confirm the name and age of the performer. 
However, the identification number of the picture identification card 
presented to confirm name and age--such as drivers' license number or 
passport number--may not be redacted, so that its validity may be 
confirmed. Second, the proposed rule clarified that producers of visual 
depictions performed live on the Internet need not maintain a copy of 
the full running-time of every such depiction. Rather, they may 
maintain a copy that contains running-time sufficient to identify each 
and every performer with the records needed to confirm his or her age.
    Third, the proposed rule clarified that, with regard to the 
government-issued photo identification required for records, a foreign-
government-issued picture identification is acceptable if the performer 
providing it is a foreign citizen and the producer maintaining the 
records produces the visual depiction of the performer in a foreign 
country, no matter whether the producer is a U.S. or foreign citizen. 
That is, a U.S. producer who produces a depiction of sexually explicit 
conduct while located in a foreign country may rely on a foreign-
government-issued picture identification card of a performer in that 
depiction who is a foreign citizen. All other requirements of the 
regulations continue to apply mutatis mutandis--i.e., the producer must 
examine and maintain a legible copy of the foreign-government-issued 
picture identification card in his records. Furthermore, a foreign-
government-issued picture identification card is not sufficient to 
comply with the regulations for U.S. citizens, even when abroad. That 
is, if a U.S. producer travels to a foreign country to produce a 
depiction of sexually explicit conduct, all U.S. citizens performing in 
the depiction must have a U.S.-government-issued picture identification 
card, even though a foreign citizen performing in the same depiction 
may provide a foreign-government-issued picture identification card. 
And, as is the case in the current regulation, only a U.S.-government-
issued picture identification card complies with the regulations 
relating to productions in the United States, no matter whether the 
performer is a U.S. or foreign citizen. The regulation also states that 
producers of visual depictions made after July 3, 1995, the effective 
date of the regulations published in 1992, and before June 23, 2005, 
the effective date of the current regulations published in 2005, may 
rely on picture identification cards issued by private entities such as 
schools or private employers that were valid forms of required 
identification under the provisions of part 75 in effect on the 
original production date. Finally, although it was not necessary to 
change the text of the regulations for this purpose, the Department 
clarified at the time that it issued the proposed rule that a producer 
need not keep a copy of a URL hosting a depiction that the producer 
produced but over which he exercises no control.
Section 2257A
    As noted above, on June 6, 2008, the Department published a 
proposed rule making additional amendments to part 75 to implement 
section 2257A. See Inspection of Records Relating to Depiction of 
Simulated Sexually Explicit Performances, 73 FR 32262 (June 6, 2008) 
(CRM. 105; RIN 1105-AB19). The June 2008 proposed rule contained two 
key elements--a definition of ``simulated sexually explicit conduct'' 
and the details of the certification regime.
    As to the definition of ``simulated sexually explicit conduct,'' as 
noted above, ``sexually explicit conduct'' is defined in section 
2256(2)(A) with reference to certain physical acts and with reference 
to both ``actual'' and ``simulated'' performance of those acts. No 
definition of ``actual'' or ``simulated'' is contained in section 2256, 
or anywhere else in chapter 110. When first published in 1990, amended 
in 2005, and proposed to be amended in 2007, part 75 did not adopt a 
definition of ``actual,'' because the Department believed that in the 
context of the acts described, the meaning of the term was sufficiently 
precise for regulatory purposes. Public comments on the previous 
versions of part 75 did not address the definition of ``actual,'' nor 
has the meaning of that term arisen in litigation regarding the 
regulations.
    With the extension of part 75 to cover simulated conduct, however, 
and with the statutory provision for a certification regime for 
simulated conduct, the Department believed that a definition of the 
term ``simulated sexually explicit conduct'' was necessary. A 
definition would make clear to the public what types of conduct come 
within the ambit of the regulation, as distinct from conduct not 
covered at all, and what types of conduct will be eligible for the 
certification regime.
    The Department started its analysis of the proper definition of the 
term for regulatory purposes with the term's plain meaning. The word 
``simulated'' is typically defined as ``made to look genuine.'' 
Merriam-Webster's Collegiate Dictionary 1162 (11th ed. 2003).
    The Department believes that an objective standard--that is, one 
defined in terms of a reasonable person viewing the depiction--is 
appropriate to add to this basic definition. The proposed rule's 
definition of ``simulated sexually explicit conduct'' thus read as 
follows: ``[S]imulated sexually explicit conduct means conduct engaged 
in by performers in a visual depiction that is intended to appear as if 
the performers are engaged in actual sexually explicit conduct, and 
does so appear to a reasonable viewer.''
    The June 2008 proposed rule's definition was based on the plain 
meaning of the term and is supported by extrinsic sources of meaning. 
Chapter 110 was created by the Protection of Children Against Sexual 
Exploitation Act of 1977, which defined ``sexually explicit conduct'' 
to include both ``actual or simulated'' acts. See Protection of 
Children Against Sexual Exploitation Act of 1977, Public Law 95-225, 
section 2(a), 92 Stat. 7, 8 (1978). That statute did not define 
``simulated,'' however, and the legislative history of the act does not 
indicate that Congress considered defining that term. See S. Rep. No. 
438, 95th Cong., 1st Sess. (1977); H.R. Report No. 696, 95th Cong., 1st 
Sess. (1977). When Congress amended chapter 110 in 1984, it considered 
defining ``simulated'' but ultimately did not do so, thereby leaving 
the definition of that term to the discretion of the Attorney General.
    As noted above, most States have laws similar to the federal 
statute criminalizing production, distribution, and possession of 
simulated sexually explicit conduct involving a minor. A number of 
those States' statutes, in contrast to section 2257A, define 
``simulated,'' and therefore may inform the federal definition of that 
term in part

[[Page 77436]]

75. State definitions of ``simulated'' generally fall into three 
categories:
    (1) Definitions based on giving the appearance of actual sexually 
explicit conduct. For example: ``An act is simulated when it gives the 
appearance of being sexual conduct.'' Cal. Penal Code section 
311.4(d)(1); 14 V.I. Code section 1027(b). `` `Simulated sexually 
explicit conduct' means a feigned or pretended act of sexually explicit 
conduct which duplicates, within the perception of an average person, 
the appearance of an actual act of sexually explicit conduct.'' Utah 
Code Ann. section 76-5a-2(9). ``Sexual intercourse is simulated when it 
depicts explicit sexual intercourse which gives the appearance of the 
consummation of sexual intercourse, normal or perverted.'' Mass. Ann. 
Laws ch. 272, section 31; N.H. Rev. Stat. Ann. section 649-A:2(III).
    (2) Definitions based on depiction of genitals that gives the 
impression of actual sexually explicit conduct, such as: `` `Simulated' 
means any depicting of the genitals or rectal areas that gives the 
appearance of sexual conduct or incipient sexual conduct.'' Ariz. Rev. 
Stat. section 13-3551(10); Miss. Code Ann. section 97-5-31(f); Mont. 
Code Ann. section 45-5-625(5)(c).
    (3) Definitions based on (a) the depiction of uncovered portions of 
the body and (b) that gives the impression of actual sexually explicit 
conduct, such as: `` `Simulated' means the explicit depiction of 
[sexual] conduct * * * which creates the appearance of such conduct and 
which exhibits any uncovered portion of the breasts, genitals, or 
buttocks.'' Fla. Stat. Sec.  827.071(1)(i). `` `Simulated' means the 
explicit depiction of sexual conduct that creates the appearance of 
actual sexual conduct and during which a person engaging in the conduct 
exhibits any uncovered portion of the breasts, genitals, or buttocks.'' 
Tex. Penal Code Sec.  43.25(a)(6). `` `Simulated' means the explicit 
depiction of any [sexual] conduct * * * which creates the appearance of 
such conduct and which exhibits any uncovered portion of the breasts, 
genitals or buttocks.'' N.Y. Penal L. Sec.  263.00(6).
    The definitions categorized above as ``based on giving the 
appearance of actual sexually explicit conduct'' are closest to that 
proposed by the Department in the proposed rule. The other two 
definitions, which require the actual depiction of nudity, are overly 
restrictive in that a child may be exploited in the production of a 
visual depiction of simulated sexually explicit conduct even if no 
nudity is present in the final version of the visual depiction. The 
producer of the depiction may arrange the camera or the body positions 
to avoid depicting uncovered genitals, breasts, or buttocks yet still 
cause harm to the child by having him or her otherwise realistically 
appear to be engaging in sexually explicit conduct.
    It is also important to note that ``simulated'' in this context 
does not mean ``virtual.'' For purposes of chapter 110, including 
sections 2256, 2257, and 2257A, and for purposes of part 75, 
``simulated sexual explicit conduct'' means conduct engaged in by real 
human beings, not conduct engaged in by computer-generated images that 
only appear to be real human beings. Although Congress did attempt to 
criminalize production, distribution, and possession of ``virtual'' 
child pornography on the basis that it contributed to the market in 
child pornography involving real children, the Supreme Court held that 
the child-protection rationale for the criminalization of child 
pornography under Ferber did not apply to images in which no real 
children were harmed. See Ashcroft v. Free Speech Coalition, 535 U.S. 
234, 250-51 (2002). Section 2257A does not cover such ``virtual'' child 
pornography, but rather ``simulated'' sexually explicit conduct, the 
production of which, as noted above, can exploit a real child. The 
Court's decision in Ashcroft is thus not relevant to sections 2257 or 
2257A, or part 75, which, for clarity's sake, consistently refers to 
sexually explicit conduct engaged in by an ``actual human being.''
    The second key element of the proposed rule was the crafting of the 
certification regime. In enacting section 2257A, Congress determined it 
would be appropriate, in certain circumstances, to exempt producers of 
visual depictions of lascivious exhibition (for which records must be 
kept under section 2257, as amended by the Act) and producers of visual 
depictions of simulated sexually explicit conduct (for which records 
must be kept under section 2257A) from statutory requirements otherwise 
applicable to such visual depictions. See 18 U.S.C. 2257A(h).
    The safe harbor provision in the statute in essence permits certain 
producers of visual depictions of lascivious exhibition or of simulated 
sexually explicit conduct to certify that in the normal course of 
business they collect and maintain records to confirm that performers 
in those depictions are not minors, while not necessarily collected and 
maintained in the format required by part 75. Where a producer makes 
the required certification, matter containing such visual depictions is 
not subject to the labeling requirements of the statute.
    In the June 2008 proposed rule, the Department crafted a 
certification regime that would have implemented the safe harbor in 
such a way as to permit such producers, in accordance with the statute, 
to be subject to lesser record-keeping burdens than those in part 75 
while still protecting children from sexual exploitation. The proposed 
rule would have required producers to include the following information 
in certifications: (1) The legal basis for the exemption and basic 
evidence in support; (2) a statement that they collect and maintain the 
requisite individually identifiable information concerning their 
employees; (3) a list of the producer's materials depicting simulated 
sexually explicit conduct or lascivious exhibition that show non-
employee performers; (4) a list of the producer's materials depicting 
simulated sexually explicit conduct or lascivious exhibition produced 
since the last certification; (5) with respect to foreign-produced 
material, a statement that the foreign producer of that material either 
collects and maintains the requisite records or itself has made a 
certification, or, with respect to material depicting sexually explicit 
conduct only, a statement that the producer took reasonable steps to 
confirm that the performers depicted in that material are not minors; 
(6) if applicable, a list of the foreign-produced material depicting 
simulated sexually explicit conduct that the producer took reasonable 
steps to confirm did not depict minors; and (7) if applicable, a 
statement that the primary producer of material secondarily produced by 
the certifying producer either collects and maintains the requisite 
records or itself has made a certification. The proposed rule would 
also have required that the certification be submitted every two years.

Changes From the Proposed Rules

    This final rule makes a number of changes in the proposed rules in 
response to commenters' concerns. The Department believes that the 
changes, while still enabling the Department to enforce the statutes, 
will considerably lessen the burdens on the regulated industries.
    Most significantly, as described in more detail below in response 
to specific comments, the Department has done the following:
     Consolidated the publication of the final versions of the 
two proposed rules into one final rule;

[[Page 77437]]

     Ensured that the regulatory requirements applicable to 
depictions of actual sexually explicit conduct consisting of lascivious 
exhibition apply starting on the date of availability of the 
statutorily provided safe harbor;
     Permitted the use of third-party custodians of records;
     Permitted records to be maintained digitally;
     Clarified the definition of ``simulated sexually explicit 
conduct'';
     Clarified the exemption from the record-keeping 
requirements for those engaged in distribution;
     Clarified that, for purposes of the requirement that every 
page of a Web page contain the disclosure statement, a hyperlink or 
``mouseover'' is permitted;
     Eliminated the requirement that statements on the location 
of records contain a date of production (or any other date), although 
added a requirement that primary producers create a record of the date 
of production;
     Clarified the application of the requirements regarding 
location of the statement to DVDs; and
     Eliminated the detailed information required by the 
certification regime, and replaced it with a significantly simpler 
certification.

Comments on the Proposed Rules

    The following section reviews comments to the proposed rules and 
how, if at all, the Department has changed the final rule in response 
to them. Comments on both proposed rules are included in this section, 
organized according to the subsections of the rule.

Definitions

    The proposed rule outlined several changes to definitions of terms 
that are contained in 28 CFR 75.1. The Department received a number of 
comments regarding the proposed definitions.

Picture Identification Card

    The proposed rule requires in Sec.  75.1(b) that a producer of 
actual sexually explicit conduct check a picture identification card 
issued by a United States or State government entity for a performer 
who is an American citizen, whether the production occurs in the United 
States or abroad. Under the proposed rule, a producer abroad may rely 
on foreign government identification cards for foreign performers, but 
must maintain a copy of that identification, and a producer may not 
rely on a foreign identification card for a foreign citizen when 
production occurs in the United States, but must check a United States 
identification card in that circumstance. The Department received three 
comments on this proposal, all of which voiced opposition.
    One comment noted that a producer cannot hire a foreign adult 
performer to work in the United States who lacks American documents, 
but that if the producer took her across the border, then she could 
work with foreign documents, a situation the commenter suggested would 
not help children. The commenter also states that because the proposed 
rule lacked a good faith exception, a producer operating outside the 
United States would need to make sure that a performer using foreign 
documents was not in fact an American citizen. Moreover, the commenter 
claims that the goal of avoiding errors in immigration status that the 
proposed rule would therefore achieve did not help children.
    The Department declines to adopt this comment. Protecting American 
citizens is a top priority of the Department, and given the more 
stringent standards for issuing government identification documents in 
recent years, the Department believes that children will be best 
protected by a requirement that American identification documents be 
provided before an American is hired to engage in sexually explicit 
conduct. It further believes that conduct within American borders 
should necessitate that the producer check for American issued 
identification documents even if the performer is a foreign citizen, so 
that all producers in this country check the age and identification of 
all performers. It is true that the rules will differ if the production 
occurs in foreign countries with foreign performers. Given the 
Department's resources and concerns regarding comity, the Department 
continues to believe that the proposed rule best addresses this issue.
    One comment expressed the belief that the Department should not 
always require that a producer obtain a copy of a picture 
identification card before creating an actual sexually explicit 
depiction. It hypothesizes the existence of a recording of a sexual act 
by a Congressman in a public place. It argues that a news organization 
could not air this recording under the proposed rule in the absence of 
the checking of a picture identification card, even though the 
Congressman by constitutional operation must be at least 25 years old.
    The Department declines to adopt this comment. Regardless of the 
apparent age or identity of an individual, the rule appropriately 
requires that identification be checked to determine that the performer 
is of legal age. The individual pictured in this hypothetical may only 
appear to be a Congressman, for instance. Moreover, an entity regulated 
by the FCC, which the comment presupposes for airing such a depiction, 
may well be able to utilize the exemption provisions of section 2257A.
    The Department has also clarified that a picture identification 
card must include the performer's date of birth. Such a requirement was 
implicit in the proposed rule in that picture identification documents 
issued by government agencies, such as a passport or driver's license, 
normally contain the individual's date of birth. The final rule makes 
this requirement explicit.

Producer

    The Department received thousands of comments that appear to be 
part of an orchestrated campaign that opposes the requirement in the 
proposed rule that adult social-networking sites obtain and maintain 
personal information concerning their users, including obtaining and 
maintaining users' photo identification, as well the ability of the 
Department to inspect such records and invade user privacy without 
safeguarding the information once observed. They state that it is not 
feasible to have adult networking sites for thousands of users under 
the rule, and they note that users of such sites already certify that 
they are over 18.
    The Department does not adopt these comments. First, most social 
networking sites would appear not to be covered by the statute and the 
rule under the definition of ``produces'' in section 2257(h)(2)(B)(v) 
and Sec.  75.1(c)(4)(v), respectively. The statutory definition 
excludes from ``produces'': ``the transmission, storage, retrieval, 
hosting, formatting, or translation (or any combination thereof) of a 
communication, without selection or alteration of the content of the 
communication.'' See also 28 CFR 75.1(c)(4)(v) (excluding ``[a] 
provider of an electronic communication service or remote computing 
service who does not, and reasonably cannot, manage the sexually 
explicit content of the computer site or service''). Therefore, the 
Department does not accept that such sites cannot operate under the 
proposed rule, or that such sites must maintain information concerning 
their users, much less that the Department must be able to inspect such 
data. However, one who posts sexually explicit activity on ``adult'' 
networking sites may well be a primary or secondary producer. Users of 
social networking sites may therefore be subject to the proposed rule, 
depending on their conduct. That such users may certify without penalty 
or effective

[[Page 77438]]

monitoring that they are over 18 is irrelevant to compliance with the 
proposed rule, since they may not in fact be above 18. Moreover, 
depictions such users put on the sites may feature not only themselves 
but other people who have not even made the unverifiable certification 
required by a social networking site.
    One comment states that the Department must clarify the distinction 
between secondary producers and distributors. The comment notes that 
the Act amended the statutory definition of ``produces'' to broaden the 
distribution exclusion from ``mere distribution'' to ``distribution.'' 
See 18 U.S.C. 2257(h)(2)(B)(ii). The comment states that this means 
``distribution'' is not meant to be narrowly construed, and that the 
Department should thus state that ``unless an entity that disseminates 
a depiction of sexually explicit conduct is responsible for creating or 
materially altering its content, or for its physical construction, the 
entity is engaged in `distribution' and is exempt from the statute and 
rules.'' The comment goes on to note that ``non-material alteration'' 
should include removing or pixilating depictions of sexually explicit 
conduct.
    The Department adopts this comment in part. The Department cannot 
adopt the comment in toto because doing so would conflict with the 
statute in that sections 2257(h)(2)(A)(ii) and (iii) include several 
activities under the definition of ``produces,'' such as digitizing an 
image, inserting an image on a computer site or service, or managing 
the sexually explicit content of a computer site or service, that would 
fall under the comment's proposed definition of ``distribution.'' The 
Department, however, states in the final rule that, unless activities 
are described in section 2257(h)(2)(A), an entity whose activities are 
limited to the dissemination of a depiction of sexually explicit 
conduct without having created it or altered its content is excluded 
from the definition of ``producer.''
    The Department cannot adopt the suggestion as to ``non-material 
alteration'' of depictions for two reasons: First, pixilating an image 
would appear to constitute ``creating a digitally- or computer-
manipulated image of an actual human being,'' and thus would fall under 
the definition of ``produces'' in section 2257(h)(2)(A)(i); second, to 
the extent images are posted on Web sites, alteration (and subsequent 
posting on a Web site) of an image would appear to constitute 
``inserting * * * [such image] on a computer site * * * or otherwise 
managing the sexually explicit content'' of such a site. While the 
comment correctly states that the proposed exclusion is analogous to 
the exclusion for transmission, which permits a transmitter to delete 
material that it considers ``obscene * * * or otherwise objectionable'' 
without being considered to have selected or altered the content of the 
communication, see 18 U.S.C. 2257(h)(2)(B)(v) (citing 47 U.S.C. 
230(c)), Congress did not provide similar language modifying the 
exclusion for distribution of the image, and thus the Department is 
limited by the statutory text.
    In addition, as described in more detail below, in certain 
circumstances a pixilated depiction can still constitute lascivious 
exhibition. United States v. Knox, 32 F.3d 733 (3d Cir. 1994). A 
categorical exemption for persons who pixilated or otherwise obscured 
depictions would risk creating a loophole for the production of 
material that is in fact covered by the definition of sexually explicit 
conduct.
    Several commenters ask the Department to exclude news and 
documentary programming from the definition of ``producer.'' The 
comments claim that producers of that programming use footage provided 
by others under the fair use doctrine. The comments posit that if a 
producer includes news and documentary producers, then such producers 
either will lose the ability to obtain footage depicting any adult 
sexual conduct, or will be forced to make payments to the original 
producer notwithstanding the fair use doctrine.
    The Department declines to adopt this comment. The First Amendment 
does not permit even a bona fide reporter to trade in child pornography 
in order to create a work of journalism, see United States v. Matthews, 
209 F.3d 338 (4th Cir. 2000), not to mention the possibility that 
someone might purport to be a news or documentary producer to evade the 
statute. Accordingly, it is consistent with the law for the final rule 
to cover journalistic and similar works.
    One comment inquires whether a secondary producer is required by 
the proposed rule's change to Sec.  75.2(a)(1) to ``examin[e] * * * a 
picture identification card prior to production of the depiction,'' or 
whether this obligation is limited to the primary producer. The 
commenter asks that the Department allow an entity that obtains a 
domestic or foreign-made film or program for American distribution but 
has no role in the production of that film or program to be considered 
a ``distributor'' rather than a ``secondary producer'' of such 
material, and therefore to be exempt from the requirements. The comment 
would allow secondary producers to disseminate a work in the United 
States even when a primary producer failed to obtain the required 
records prior to the date of original production.
    The Department declines to adopt this comment. The comment would 
effectively turn all secondary producers into distributors, exempting 
them from section 2257's requirements, contrary to the Act's making 
section 2257 applicable to that activity. A significant goal of the 
legislation was to eliminate commercial markets for non-commercially 
produced child pornography. Although the rule does not require 
secondary producers to check identification themselves, secondary 
producers should be aware that they incur a significant risk if they do 
not avail themselves of the identification documents that primary 
producers have created. Secondary producers who do not check records 
run the risk that they are distributing child pornography if the 
performers depicted in fact were not of legal age. Furthermore, to the 
extent that such foreign-produced material includes only lascivious 
exhibition, a U.S. secondary producer could avail itself of the 
provisions of the certification.
    One comment notes the proposed rule's elimination of ``mere'' from 
the term ``mere distribution'' that is contained in the current 
regulation and requests that the Department add ``or gratuitous 
transfer'' after the word ``distribution'' in the definition of 
``producer'' in Sec.  75.1(c)(4)(ii). The comment suggests that adding 
``or gratuitous transfer'' would avoid a potential problem in the 
meaning of the word ``distribution'' when read in connection with the 
term's restriction to commercial contexts in Sec.  75.1(d) of the 
current regulations. The comment believes that the latter provision 
correctly suggests that the regulations' record-keeping requirements 
are restricted to commercial production operations. And it requests 
that the Department to elaborate whether or which transfers should 
require disclosure statements.
    The Department declines to adopt this comment. The definitions in 
the proposed rule are (with minor grammatical changes to conform to the 
structure of the regulation) exactly those in the statute, and the 
Department sees no need for further clarification, particularly with 
respect to a particular term that itself would have to be defined.
    One comment asks the Department to remove the term ``assembles'' 
from the definition of ``producer'' in Sec.  75.1(c)(2). The Department 
declines to adopt this comment. As noted above, the

[[Page 77439]]

definitions in the regulations are those contained in the statute, and 
the statutory definition of ``produces'' includes ``assembling * * * a 
book, magazine, periodical, film, videotape, digital image, or picture, 
or other matter intended for commercial distribution, that contains a 
visual depiction of sexually explicit conduct.'' 18 U.S.C. 
2257(h)(2)(A)(ii).
    One comment notes that many depictions will have more than one 
primary producer, as a depiction can be photographed, then digitized, 
or be generated by computer from a depiction of an actual person. 
Various entities could be involved in creating a particular depiction. 
Each entity or person who performed even one of these tasks would be a 
primary producer. Moreover, since only secondary producers can rely on 
copies of documents, the comment requests that the Department provide 
that only one primary producer should be designated and required to 
maintain records.
    Another comment states that the rules are unclear concerning how 
many or which producers must be named if there is more than one primary 
or secondary producer. It notes that parents and subsidiaries may not 
have the same address. The Department adopts this comment in part by 
stating that the final rule provides that where a primary producer is a 
corporate entity, only one primary producer associated with that entity 
will exist. For purposes of efficiency in inspection, where the 
corporate parent entity is the primary producer, that is the entity 
that should be named in the disclosure statement as the keeper of the 
records.
    The Department adopts these comments in part. In response to a 
similar comment, the final rule published in 2005 stated, ``The 
Department does not believe that logic, practicability of record-
keeping or inspections, or the statue dictates that there be one and 
only one primary producer for any individual sexually explicit 
depiction. Any of the persons defined as primary producer has easy 
access to the performers and their identification documents and should 
therefore each have responsibility individually and separately of 
maintaining the records of those documents.'' However, upon 
reconsideration, the Department has decided to clarify that if multiple 
individuals are all employed by the same entity, the entity constitutes 
the ``primary producer'' for purposes of record-keeping, not the 
individuals.
    Similarly, one comment notes that a single reproduction can create 
numerous secondary producers. Under Sec.  75.1(c)(2), a preexisting 
photograph can be digitized by one person, inserted on a computer site 
by another, which is managed by a third, and if each of these is 
employed by a corporation, then there are now seven secondary producers 
arising out of a single reproduction, each of whom must now seek and 
obtain from the primary producer information concerning every depicted 
performer. The commenter considers this scenario to be unlikely, 
threatening availability of the depiction.
    As with the similar comment regarding multiple primary producers, 
the Department adopts this comment in part. The Department has 
clarified that if multiple individuals are all employed by the same 
entity, the entity constitutes the ``secondary producer'' for purposes 
of record-keeping, not the individuals. However, there may be multiple 
secondary producers who are separate entities engaged in separate 
commercial enterprises--e.g., one company purchases a depiction from 
the primary producers and publishes it on a Web site and another 
purchases and publishes the same depiction in a magazine several years 
later--and who must each maintain the records associated with the 
depiction.
    One comment questions whether Sec.  75.1(c)(4)(v), which allows a 
Web site such as YouTube to post depictions without having to keep 
records, allows someone to display a YouTube video on their own Web 
site and still fall within the exemption because YouTube would not have 
the records itself and the person downloading from YouTube would not 
have access to the records. As described in the comment, it would 
appear that the individual who downloads a depiction of actual sexually 
explicit material from a another site onto a site that he or she 
controls is a producer because he or she has ``reproduc[ed]'' or 
``insert[ed] on a computer site or service a digital image of, or 
otherwise manage[ed] the sexually explicit content of a computer site 
or service that contains a visual depiction of an actual human being 
engaged in actual sexually explicit conduct'' within the meaning of the 
definition of ``secondary producer'' in Sec.  75.1(c)(2). Whether or 
not the source for the person is a site such as YouTube, which may not 
be required to maintain records as a secondary producer, since the 
original individual producer who posts a depiction on that site is 
required to affix a disclosure notice to each page of the sexually 
explicit depiction, a secondary producer who downloads that depiction 
onto another site should be able to obtain the requisite information 
for compliance with its own record-keeping and disclosure requirements.

Date of Original Production

    The proposed rule defined ``date of original production'' to mean 
the date that the primary producer actually created the image of actual 
sexually explicit conduct. One comment requests that the Department 
define this term in this fashion for primary producers, but, in the 
case of secondary producers, that the date of original production 
should also be permitted, at the discretion of the secondary producer, 
to be the date of the secondary producer's relevant conduct.
    The Department adopts this comment. Obtaining the date of the 
original production from the primary producer should not pose a problem 
for a secondary producer, since the secondary producer obtains the 
records of the production from the producer. As explained more fully 
below, the Department in the final rule has eliminated the requirement 
that the statement of location of records required by Sec.  75.6 
contain a date of original production (or any other date, as in the 
regulation currently in force). Hence, a secondary producer is not 
responsible for including that information in a statement that it 
affixes to material it secondarily produces. However, primary 
producers, as explained below, will henceforth be required to create 
and maintain a record of the date of original production, such record 
being transferred to the secondary producer along with all other 
records required by part 75.
    To the extent that this is a new requirement for both primary and 
secondary producers that did not exist previous to the proposed rule, 
the Department clarifies that it applies only prospectively from the 
date of the publication of this final rule.
    Also, in response to a comment, the Department has clarified that 
if a depiction is made over the course of multiple dates, the date of 
original production consists of the earliest of those dates. There is 
no requirement in the rule that any depicted performer be 18 on the 
date of original production so long as that performer is 18 as of the 
date that a depiction of that individual is created. Producers who keep 
records demonstrating that performers are 18 as of the date of original 
production conform to the requirements of the rule. The final rule has 
been changed to reflect that in the case of a performer who was under 
18 at the time that production began, but became of legal age before he 
or she was depicted, an alternative date of original production

[[Page 77440]]

with respect to that performer is the first date that that performer 
was actually filmed for the production at issue.
    The Department has also clarified the meaning of ``date of original 
production'' with respect to matter that is a secondarily produced 
compilation of one or more separate, primarily produced depictions. The 
final rule provides that with respect to such a compilation, the date 
of original production of the matter is the earliest date after July 3, 
1995, on which any individual depiction therein was produced. In the 
event a performer in any of the individual depictions was under 18 on 
that date, the alternative date of original production with respect to 
that performer is the first date that any scene depicting that 
performer was actually recorded.

Employed by

    One comment states that the Department erred in defining 
``employed'' in the 2257A proposed rule because the Department cannot 
make the term broader than it is normally understood by simply defining 
it broadly. The comment goes on to state that ``[w]e do not think that 
it is a rare case at all that a producer creates images covered by 
sections 2257 or 2257A which depict non-employees--as properly 
understood--in sexual roles. But defining `employe[e]' more broadly 
than usual defeats the obvious sense of the safe harbor provision which 
Congress has promulgated.''
    The Department declines to adopt this comment. The definition of 
``employed'' used in the proposed rule is consistent with the commonly 
understood definition, which does not necessarily require that an 
employee be paid by an employer. One common definition of ``employ'' is 
``to use or engage the services of,'' while another is ``to provide 
with a job that pays wages or a salary.'' Merriam-Webster Collegiate 
Dictionary 408 (11th ed. 2003). Although the commenter seeks to 
characterize the Department's definition of the term as somehow broader 
than normal, the Department's definition is wholly consistent with the 
dictionary definition of the term in that it covers not only a producer 
providing a person with a job that pays wages but also a producer using 
or engaging the services of a person. The Department thus does not 
believe that the proposed rule's definition of ``employed'' is 
inconsistent with the text of the statute.

Sexually Explicit Conduct

    Many comments argue that the Dost factors are vague and not readily 
transferable to an adult, notwithstanding the Department's statements 
concerning the proposed rule. These comments asserted that inquiring 
whether setting, pose, and visual depictions are appropriate, natural, 
or suggestive for a child are nonsensical for adults because such 
conduct is not improper for adults. One comment maintained that the 
Dost factors represent in this context an inappropriate burden shift 
from presumed constitutional expression to a presumption of child 
pornography, and another suggested that an image not otherwise 
lascivious could be inappropriately found to be lascivious based on its 
proximity to adult lascivious images.
    The Department does not adopt these comments. The Department does 
not consider application of the Dost test to adults to be nonsensical. 
The point of the factors is to determine whether a particular depiction 
is of actual sexually explicit conduct for purposes of determining 
whether compliance with various legal requirements is necessary. The 
age of the person depicted is irrelevant to whether the image depicts 
actual sexually explicit conduct, except for one Dost factor that is 
age-dependent and which the proposed rule identified as not being 
relevant to the depiction's status as actual sexually explicit conduct. 
If the acts depicted would fall within any of the remaining Dost 
factors if they were performed by a minor, one who produces actual 
sexually explicit conduct must take the requisite steps necessary to 
ensure that the individual performing these acts is of legal age. The 
proposed rule creates no presumption of or against the existence of 
child pornography. The rule's applicability depends on the image as it 
is without reliance on any presumptions. The Dost factors themselves do 
not erect any presumption. Nor is the lasciviousness determination made 
with regard to anything but the depiction that is produced.
    One comment, relying on a Court of Appeals decision that accepted 
the relevance of the Dost factors, United States v. Knox, 32 F.3d 733 
(3d Cir. 1994), maintains that their applicability here would mean that 
millions of images on Myspace or Youtube or Facebook may require 
section 2257 compliance even though they do not involve nudity or 
sexual activity. The comment states that the rule must define 
exhibition of the genitals to consist only of nude exhibition. 
Otherwise, it maintains, every photo of male water polo players or 
other competitive swimmers would be potentially subject to section 2257 
record-keeping, as would other depictions of persons in tight clothing 
suggestive of genitalia.
    The Department does not adopt this comment. The comment takes an 
overly broad reading of the law of child pornography and applies that 
reading to produce a nonsensical result. The Knox case does not stand 
for the proposition claimed by the comment. It is not the case that 
pictures of boys' water polo teams constitute child pornography. The 
images at issue in Knox were lasciviously displayed. Although the 
genitals were clothed in that case, they were covered by thin, opaque 
clothing with an obvious purpose to draw attention to them, were 
displayed by models who spread or extended their legs to make the pubic 
and genital region entirely visible to the viewer, and were displayed 
by models who danced or gyrated in a way indicative of adult sexual 
relations. 32 F.3d at 746-47. None of these attributes remotely applies 
to standard swim team photographs or underwear or other mainstream 
advertising. Therefore, very few images posted on Myspace or Youtube of 
clothed individuals would require section 2257 compliance, and the 
description in this rule of the kinds of images that do so provides 
clear guidance to the narrow situations in which clothed images would 
trigger section 2257 compliance.
    One comment suggests, as an alternative to the Dost factors, that 
the rule define ``lascivious exhibition of the genitals'' to mean 
images that display an individual's naked genital area.
    The Department declines to adopt this comment. As discussion of the 
depictions at issue in the Knox case shows, there are instances when 
covered genitals can amount to child pornography. When such images are 
created, if the performers are under 18, what is being produced is 
child pornography. The obligations of the proposed rule must apply to 
producers who create depictions that could constitute lascivious 
exhibition, so as to reduce the possibility of child exploitation. One 
comment asks whether the depiction of scantily clad women in a strip 
club or bedroom would be subject to the regulations and criminal 
penalties. The comment maintains that the need to pose such a question 
means that producers would not know what materials trigger the record-
keeping requirements, which would cause a chilling effect. The comment 
claims that creators of widely shown films and television programs who 
make a mistake in this respect risk prosecution.
    The Department does not adopt this comment. The proposed rule 
rejected a

[[Page 77441]]

categorical approach that would state whether every possible depiction 
was one that fell within a definition. Rather, it adopted the Dost 
factors, which rely on context as well as content. A depiction of 
scantily clad women in a strip club or bedroom can appear in limitless 
permutations, and the Department cannot state that all or none would 
constitute lascivious exhibition of the genitals without consideration 
of the Dost factors. Those factors provide the context that producers 
and the Department will rely on to determine whether an image depicts 
actual sexually explicit conduct so as to minimize any chilling effect. 
Film and television producers are particularly unlikely to risk 
prosecution for displaying scantily clad performers because of the 
certification option.
    One comment suggested that because of the vagueness of the Dost 
test, a producer may not know that he must obtain identification before 
production. If the producer does not do so, the comment asks what 
options are then available to the secondary producer who determines 
that the Dost test applies. The comment maintains that as a result, 
some producers may not be able to acquire and disseminate a wide range 
of movies and television programs, especially foreign productions.
    The Department does not adopt this comment. Prosecutions for 
production of child pornography have been upheld by many courts 
applying the Dost test to determine whether a depiction is one that 
lasciviously exhibits the genitals. See, e.g., United States v. Horn, 
187 F.3d 781 (8th Cir. 1999); United States v. Villard, 885 F.2d 117, 
122 (3d Cir. 1989). That they have done so contradicts the argument 
that the test amounts to unconstitutional vagueness in defining 
``lascivious exhibition.'' A secondary producer who is concerned that a 
primary producer may have violated the requirements of the statute and 
the regulation has the options of requesting that the primary producer 
revisit the issue and examine picture identification cards and compile 
age records. Furthermore, secondary producers of qualifying material 
may be able to avail themselves of the certification in section 2257A 
and its implementing regulation.
    One comment disputed the Act's extension of section 2257 to cover 
lascivious exhibition as closing a previous loophole in that statute. 
The comment asserts that the prior version reflected a desire to limit 
the law to depictions that involve actual sexually explicit activity 
and avoid overbreadth through inapplicability of its provisions to 
fully clothed adults.
    The Department does not adopt this comment. The characterization of 
the Act is not an operative part of the regulation that requires a 
response.
    One comment requests that the Department distinguish between actual 
and simulated masturbation in defining actual sexually explicit 
conduct. The Department declines to adopt this comment. To the extent 
that this is merely a subset of a larger question as to the distinction 
between ``actual'' and ``simulated'' conduct, the meaning of ``actual'' 
conduct with respect to all the conduct covered by the statute and the 
regulation is clear on its face. To the extent that ``simulated'' was 
not clear on its face, this final rule regulation contains a 
definition.
    One comment requests that the Department define ``sadistic or 
masochistic abuse'' because some people believe that safe and 
consensual bondage is not abuse, and requests that the Department 
distinguish between actual and simulated sadistic or masochistic abuse. 
The Department declines to adopt this comment. That term is not a 
subject of this rulemaking. Moreover, actual sexually explicit conduct 
depends on the content of what is being displayed, not on whether the 
content is subjectively considered to be abusive. If belief as to abuse 
were to control, a producer who determined that nothing was abusive 
would be able to avoid compliance with the regulations in their 
entirety, creating massive opportunity for child exploitation.
    One comment contends that the definition of ``sexual'' varies among 
communities and that the final rule should contain more guidance as to 
the meaning of the term. It asks whether nude photos of a single 
person's erect penis is sexual, or whether a hand over the pubic area 
is sexual.
    The Department declines to adopt this comment. It believes that the 
definition of actual sexually explicit conduct contained in the final 
rule is clear. The Department does not believe that a producer would 
have any difficulty in determining whether hypothetical depictions of 
the kind posed by the commenter would constitute actual sexually 
explicit conduct within the meaning of the rule.

Simulated Sexually Explicit Conduct

    In the proposed rule to implement section 2257A, the Department 
started its analysis of the proper definition of the term for 
regulatory purposes with the term's plain meaning. The term 
``simulated'' is generally defined as ``made to look genuine.'' 
Merriam-Webster's Collegiate Dictionary 1162 (11th ed. 2003). The 
Department believed that an objective standard--that is, one defined in 
terms of a reasonable person viewing the depiction--is appropriate to 
add to this basic definition. The proposed rule's definition of 
``simulated sexually explicit conduct'' thus read as follows: 
``[S]imulated sexually explicit conduct means conduct engaged in by 
performers in a visual depiction that is intended to appear as if the 
performers are engaged in actual sexually explicit conduct, and does so 
appear to a reasonable viewer.''
    Three comments state that the final rule should incorporate the 
definition of ``simulated sexual intercourse'' provided by the Supreme 
Court in United States v. Williams, 128 S. Ct. 1830, 1840-41 (2008). 
One comment further recommends that the definition should explicitly 
incorporate by reference the definition in Williams. That definition 
reads, in pertinent part:

``simulated'' sexual intercourse is not sexual intercourse that is 
merely suggested, but rather sexual intercourse that is explicitly 
portrayed, even though (through camera tricks or otherwise) it may 
not actually have occurred. The portrayal must cause a reasonable 
viewer to believe that the actors actually engaged in that conduct 
on camera.

Id. While the Williams definition refers to ``simulated sexual 
intercourse,'' not ``simulated sexually explicit conduct,'' the 
Department understands the comments to recommend that the final rule 
use the Williams definition as appropriately amended to refer to 
``simulated sexually explicit conduct,'' not ``simulated sexual 
intercourse.''
    The Department believes that the Williams definition conceptually 
is not dissimilar to that outlined in the proposed rule, and adopts 
both comments. The final rule thus incorporates a revised definition of 
``simulated sexually explicit conduct.''
    One comment recommends that the proposed rule's definition of 
``sexually explicit conduct'' should refer to 18 U.S.C. 2256(2)(B), not 
18 U.S.C. 2256(2)(A). The comment states that the narrower definition 
at section 2256(2)(B), which would require depictions to be graphic or 
lascivious, would be more consistent with the state laws the Department 
rejected in determining how to define ``simulated sexually explicit 
conduct.''
    The Department declines to adopt this comment. The definition at 
section 2256(2)(B) is limited, by its own terms, to images described in 
section 2256(8)(B)--images that are ``a digital image, computer image, 
or computer-generated image that is, or is indistinguishable from, that 
of a minor engaging in sexually explicit conduct.''

[[Page 77442]]

In other words, section 2256(2)(B) has no relevance to a regulation 
that concerns actual persons as opposed to virtual persons.

All Performers, Including Minor Performers

    One comment states that the proposed rule is unclear as to whether 
the record-keeping requirements apply to all performers in a depiction, 
or to primary performers, and recommends that the Department should 
clarify that these requirements apply only to primary performers and 
not to any background performers in the depiction.
    The Department declines to adopt this comment. The commenter did 
not attempt to define ``primary'' or ``background'' in this context, 
and the Department has difficulty in doing so. As a practical matter, 
in many cases it would be difficult to determine whether a performer in 
a visual depiction of lascivious exhibition or simulated sexually 
explicit conduct is a ``primary'' or a ``background'' performer. For 
example, in a lascivious exhibition depiction of a person on a bed, a 
person depicted in that same image as standing nearby, wearing 
lingerie, and watching the person on the bed could well be a 
``primary'' performer--however that term were to be defined--depending 
on the level of interaction between that person and the person depicted 
on the bed. On the other hand, conceivably a fully clothed person could 
be considered a ``background'' performer even if located on the same 
bed, again depending on the level of interaction between the 
performers. Similar confusion would apply in the context of depictions 
of simulated sexually explicit conduct. In order to avoid such 
confusion, the Department believes that it is appropriate to require, 
as stated in the proposed rule, that all performers in depictions of 
lascivious exhibition or simulated sexually explicit conduct be 
covered.

Maintenance of Records

Date of Original Production

    One comment characterizes the proposed rule as faulty because it 
does not specifically require that a record be made of the date of 
original production, although the proposed rule will require that this 
date be stated in the disclosure statement.
    The Department adopts the comment's view that it was an oversight 
that the proposed rule did not require that a record otherwise be made 
of the date of production. As noted above, the Department, after 
careful consideration, has amended the record-keeping requirement to 
include that a primary producer record the date of original production 
at the time it examines the picture identification card of the first 
performer in the depiction. Again, to the extent that this is a new 
requirement for primary producers, the Department clarifies that it 
applies only prospectively from the date of the publication of this 
final rule.
    Several comments note that in Sec.  75.2(a)(1) of the proposed 
rule, producers are required to create and maintain records of the name 
and date of birth of each performer obtained by the producer's 
examination of a picture identification card prior to the date of 
production of the depiction. They point out that the Act made no change 
to section 2257(b), which is the source of this requirement. The 
comments ask the Department to state that only the ``examination'' of 
the picture identification card that must take place prior to the 
production of sexually explicit images, and not necessarily the 
creation of a record based on the examination of the picture 
identification that must occur before production.
    The Department declines to adopt these comments. As noted above, 
the Department believes that in order to fully implement the purpose of 
the statute, the record must be made at the time of examination of the 
document and has clarified that in this final rule. Furthermore, the 
Department requires in the final rule that a primary producer make a 
record of the date of original production. This record will then flow 
to secondary producers and enable them to affix the date to the 
disclosure statement. However, in order to simplify the requirement, 
the Department has clarified that if a depiction is made over the 
course of multiple dates, the date of original production consists of 
the single and earliest of those dates.
    One comment states that the original production date is not often 
available, particularly because it was never a requirement of section 
2257. The comment cautions that were the final rule to require keeping 
this information, hosts of most Web sites will be immediately out of 
compliance. Another comment notes that the Department stated in its 
proposed rule that secondary producers need comply only with the rules 
for material that was produced after the Act's 2006 effective date, and 
Sec.  75.2(c) states that producers of visual depictions made after 
1995 and before 2005 may rely on identification that was valid under 
the record-keeping and labeling regulations that were in force on the 
date of original production.
    As noted above, the Department adopts the comment seeking 
prospective application of the record-keeping requirements documenting 
that identification was checked prior to the occurrence of production. 
The comment noting that producers may rely on identification rules and 
record-keeping requirements that applied on the date of original 
production of the depiction is correct, and demonstrates that Web site 
owners will not have to conform their existing records to the new 
requirements, contrary to the statement contained in the comment noted 
above.
    Two comments request that the record-keeping requirements with 
respect to viewing identification documents prior to production apply 
only to primary producers. According to the comments, only primary 
producers have an opportunity to examine picture identification cards 
prior to the production. At most, the comments ask, secondary producers 
should be required to examine what they receive from the primary 
producer that relates to depictions from the primary producer. One of 
the comments believes that without such an alternative, there will be 
an effective prohibition on disseminating numerous widely disseminated 
productions. And even then, it claims, foreign films would not have 
such documentation because even if a secondary producer could obtain 
and inspect the required records retroactively, it may be unable to do 
so because of difficulties in locating performers or because of data 
protection laws.
    The Department adopts these comments in part. It rejects some of 
the concerns as reflecting a misunderstanding of the requirements of 
the final rule. A secondary producer is not required under the rule to 
check identification documents. That is a responsibility only of the 
primary producer. A secondary producer may risk child pornography 
offenses, however, if he does not take steps to assure himself that the 
performer is actually of legal age. Nonetheless, the secondary producer 
is required by the final rule only to retain records. Those records 
enable the Department to identify who the primary producer was for any 
depiction and to verify that the depicted performers were of legal age. 
The Department believes that to avoid a commercial market in child 
pornography through the witting or unwitting actions of secondary 
producers, secondary producers must keep records that each depiction 
occurred only after the primary producer checked valid identification 
documents. Were secondary producers to be exempted from this 
requirement, a real risk of commercial marketing of

[[Page 77443]]

illegal product would develop. The comments are mistaken in postulating 
that the final rule imposes a duty on a secondary producer to locate 
foreign performers after the fact. What the secondary producer must do, 
even for foreign productions, is to ensure that it has copies of the 
records that show that the primary producer checked the legal age of 
performers prior to the date of original production.

Requirement of Hard Copies

    The proposed rule amends Sec.  75.2(a) concerning requirements for 
maintenance of records. The proposed rule requires that the copy of the 
identification documents be retained in hard copy form. The Department 
received four comments regarding the proposed rule's requirements for 
maintaining copies of identification card records in hard copy form.
    Two comments state that nothing in the Act or proposed rule 
requires that records be kept in hard copy format. It contends that 
there is no justification with contemporary technology for requiring 
hard copies. The comment also notes that the proposed rule represents a 
departure from Sec.  75.2(f), which permits records to be kept in 
digital form if they include scanned copies of identification 
documents. Another comment reiterates that point, and adds that 
electronic copies would permit the passage of records along the chain 
of distribution as the rules contemplate. Otherwise, records could be 
divided when shared, which could create losses or errors and put the 
producer in danger of violating rules by having incomplete or 
improperly maintained records. This comment asks that the Department 
return Sec.  75.(2)(a)(1) to its current form by deleting the word 
``hard,'' or consider the new requirement for a hard copy of the 
picture identification document to be satisfied by scanning the 
identification card or a hard copy of it, and/or by electronic versions 
that can be printed out to create hard copies at the time of 
inspection.
    The Department adopts these comments. Nothing in section 2257 
requires that records be kept in hard copy format, and, indeed, 
existing Sec.  75.2(f) permits copies of identification documents to be 
scanned and stored electronically if they can be authenticated by a 
custodian. The proposed rule did not seek to amend Sec.  75.2(f). The 
proposed rule's changes to Sec.  75.2(a) that mandate the retention of 
all copies of identification documents and pictures in hard copy format 
would create a conflict with the terms of Sec.  75.2(f). The final 
rule, therefore, amends proposed Sec.  75.2(a)(1) to add ``or digitally 
scanned or other electronic copy of a hard copy.'' Note, however, that 
in the event a regulated entity or individual decides to retain records 
in electronic format, nothing in the Act or the regulations provides 
that technical difficulties would excuse failure to make the records 
available at reasonable times for inspection.
    One comment notes that in the proposed rule the Department stated 
that a producer need not keep a copy of a URL hosting a depiction that 
the producer produced ``but over which he exercises no control.'' The 
commenter asks that the Department modify this statement to read ``but 
over which he exercises no corporate control'' or other such language 
that clarifies that the producer is not responsible for Web sites not 
owned by the producer.
    The Department declines to adopt this comment. Were the Department 
to state that the producer is not responsible for Web sites the 
producer does not own, the final rule would not apply to a producer who 
influenced or directed what happened to the depiction, even if he did 
not own the Web site. If a producer exercises control over a depiction, 
whether as an individual or as a corporate entity, and regardless of 
whether the producer owns the Web site on which the depiction is 
displayed, then the producer must retain the copy of the URL hosting a 
depiction that the producer produced. The only exception to this 
requirement, as noted above, is where an individual who would be a 
primary producer under the final rule's definition is an employee of a 
corporate primary producer. Under such circumstances, that individual 
will not be considered a primary producer.

Redaction

    One comment states that the viewer of the identification document 
need not know the Social Security number or exact birth date of a 
performer.
    The Department does not adopt this comment. The proposed rule quite 
clearly allows a producer to redact the performer's Social Security 
number. An exact birth date sometimes may be redacted so long as the 
year is not obscured. However, if a performer is 18 on the date of 
original production, the month or even the day of the month must not be 
redacted if a question would exist whether he was of legal age at the 
time of the original production.

Compliance Date

    In accordance with current law, the final rule retains July 3, 
1995, as the effective date of the rule's requirements for secondary 
producers related to depictions of actual sexually explicit conduct. 
(The current regulations, published in 2005, adopted July 3, 1995, as 
the effective date of enforcement of section 2257 based on the court's 
order in American Library Association v. Reno, No. 91-0394 (SS) (D.D.C. 
July 28, 1995).)
    In response to a comment stating that the proposed rule created 
potential confusion by omitting language from the 2007 proposed rule 
implementing the Adam Walsh Act's changes to section 2257, the 
Department clarifies, as stated in the preamble to the 2007 proposed 
rule, see 72 FR at 38036, that the one exception is that this final 
rule would not penalize secondary producers for failing to maintain 
required records in connection with those acts of production that 
occurred prior to the effective date of the Adam Walsh Act. The 
proposed rule also stated that producers of visual depictions of actual 
sexually explicit conduct made after July 3, 1995, the effective date 
of the regulations published in 1992, and before June 23, 2005, the 
effective date of the current regulations published in 2005, may rely 
on picture identification cards issued by private entities such as 
schools or private employers that were valid forms of required 
identification documentation under the provisions of part 75 in effect 
on the original production date. Finally, the proposed rule stated that 
the effective date concerning depictions of simulated sexually explicit 
conduct will be 90 days after it is published in the Federal Register 
as a final rule.
    Two comments address the disparity between the statutory effective 
date of section 2257's coverage of depictions of lascivious exhibition 
(July 27, 2006) and the statutory effective date of section 2257A (90 
days after publication of this final rule implementing section 2257A), 
which includes the safe harbor provision exempting producers who 
certify from section 2257's provisions concerning depictions of 
lascivious exhibition. One comment recommends that the Department make 
the safe harbor provision retroactive to the July 27, 2006, effective 
date of section 2257 concerning depictions of lascivious exhibition. 
The other comment states that the Department should make the effective 
date of part 75 with respect to depictions of lascivious exhibition the 
same date as the statutory effective date of section 2257A. This 
comment further states that setting the same effective date for rules 
regulating depictions of lascivious exhibition and simulated sexually 
explicit conduct would ``avoid[ ] potentially fatal vagueness problems 
under the First Amendment.''

[[Page 77444]]

Under either suggestion, the effective date of the safe harbor 
provision and the regulatory requirements concerning depictions of 
lascivious exhibition would be the same.
    The Department adopts these comments in part. The final rule 
provides that the regulatory requirements applicable to depictions of 
lascivious exhibition apply starting 90 days after the publication of 
this final rule.
    Two comments argue that the proposed rule creates First Amendment 
vagueness and ex post facto problems because individuals did not create 
records as of the effective date of the proposed rule which they did 
not think would be necessary. The Department does not accept the 
comment that the proposed rule created any First Amendment vagueness 
problem, see American Library Ass'n, supra, but does accept the comment 
insofar as the proposed rule would operate retroactively and, as stated 
above, modifies the compliance date accordingly.
    Two comments state that to avoid retroactivity, the final rule 
should not apply to material that is actually sexually explicit only 
because it displays lascivious exhibition of the genitals and that was 
acquired by a secondary producer prior to the compliance date of the 
regulation. One of these comments requests the Department, if it adopts 
a different standard, to define ``acts of production,'' so that a 
secondary producer would know based on an acquisition date or other 
standard what content required record-keeping and what did not.
    The Department declines to adopt this comment. Although the 
Department is sympathetic to the concerns expressed in the comment, and 
wishes to avoid retroactivity, it does not agree that the date that a 
secondary producer obtained the image displaying lascivious exhibition 
of the genitals should determine whether the regulation applies. There 
is no requirement in the existing or proposed rules that secondary 
producers document the date they obtained particular depictions. Were 
the Department to adopt the comment, unscrupulous secondary producers 
could claim that they acquired any depiction created before the final 
rule's compliance date prior to that date. Secondary producers who 
wished to demonstrate in good faith that their collections contained 
depictions that were obtained only after the compliance date of the 
final rule would be obliged to mark every such depiction currently in 
their possession to prove that they possessed it as of that date. 
Moreover, the Department would have no way of proving that the producer 
acquired the depiction prior to the compliance date of the final rule. 
The Department seeks to ensure that prohibited depictions were not 
created on or after the compliance date as herein modified. This 
concern derives from the statutory language, which turns on the date of 
production. The date that the secondary producer acquired the image is 
of no relevance. A secondary producer will be able to comply with the 
final regulation on an exclusively prospective basis by determining 
that appropriate procedures were followed for such depictions that were 
originally produced after the compliance date of the final rule.
    Another comment requests that, even if the Department were to adopt 
a prospective compliance date, the final rule not apply to images (as 
opposed to depictions) created before the compliance date, i.e., a 
digitization of a previously existing depiction. The comment points out 
that a digital image made after the compliance date could be based on 
an initial depiction that could be older. The producer of the digital 
image could not use that earlier depiction, even if it were eighty 
years old, because it could not reconstruct the records. Therefore, the 
comment concludes that the final rule should be limited to images first 
created before the compliance date. The comment also states that the 
Department must accept that it cannot address preexisting content.
    The Department declines to adopt this comment. The Department does 
agree that because the final rule will apply prospectively, it cannot 
address preexisting depictions that constitute actual sexually explicit 
material only because they display lascivious exhibition of the 
genitals. However, the Department can address digitized or other 
modified versions of preexisting content where the modifications occur 
after the final rule's compliance date. In light of the changed 
compliance date of the rule, any preexisting depiction of lascivious 
exhibition of the genitals that is not now digitized can be digitized 
before the rule takes effect. That will avoid the problem stated by the 
comment. Any secondary producer after that date who digitizes a 
depiction without obtaining records showing that the depiction was in 
accordance with the final rule will either need to obtain another 
digitized version of the depiction that does so or track down the 
primary producer of either the original or another digitized version of 
the depiction to create the records.
    One comment notes that the statutory language on this point is 
broader than the language of the proposed rule. The statute says that 
section 2257 does not apply to ``any depiction of actual sexually 
explicit conduct'' involving lascivious exhibition of the genitals that 
was produced ``in whole or in part'' prior to the compliance date. The 
comment states that the final rule should track that language.
    The Department declines to adopt this comment. The comment implies 
that under the statutory language, any depiction of lascivious 
exhibition of the genitals that was produced after the compliance date 
of the final rule is not covered by section 2257 if any other part of 
the image was produced before the compliance date. The Department does 
not so read the statute. There are five situations in which the 
statutory language discussed could apply, and the Department believes 
that it is important to set forth the applicability of the statutory 
language to each.
    First, prior to the compliance date of the final rule, a depiction 
could have been created of lascivious exhibition of the genitals and no 
other form of actual sexually explicit conduct as that term is defined 
after the compliance date of the final rule. Prior to the final rule, 
this was not a depiction of actual sexually explicit conduct. If the 
depiction were modified or another depiction connected to it that did 
not contain lascivious exhibition or another form of actual sexually 
explicit conduct, then the final rule would not apply because the 
lascivious exhibition of the genitals was produced before the 
compliance date of the final rule.
    Second, a depiction produced before the compliance date could have 
contained neither actual sexually explicit conduct as that term was 
then defined nor lascivious exhibition of the genitals. If a producer 
then altered or added to the depiction, or to a connected depiction, a 
depiction of lascivious exhibition of the genitals after the compliance 
date, this comment implies, the depiction would be one of lascivious 
exhibition of the genitals that was ``in part'' created after the 
compliance date of the final rule, and the final rule would not apply. 
The Department disagrees. No depiction of lascivious exhibition of the 
genitals was contained in this image before the compliance date of the 
regulation. All such material appeared only after the compliance date 
of the regulation, and, therefore, such material is covered by the 
final rule.
    Third, a depiction of actual sexually explicit material as it was 
then defined, but which did not depict lascivious

[[Page 77445]]

exhibition of the genitals, could have been produced before the 
compliance date of the final rule. After that date, a producer might 
then add lascivious exhibition of the genitals to the depiction itself 
or to a connected depiction. According to the implication of the 
comment, section 2257 could not apply to the depiction that contains 
lascivious exhibition of the genitals because it was produced in part 
prior to the compliance date of the final rule. In fact, the image was 
already covered by the statute because it displayed actual sexually 
explicit content as that term was defined prior to the compliance date 
of the final rule. Nothing in the Act made material that was previously 
subject to section 2257 lose that status. No depiction of actual 
sexually explicit conduct involving lascivious depiction of the 
genitals was produced in whole or in part prior to the compliance date. 
Notwithstanding that the depiction of lascivious exhibition was added 
after the compliance date, the depiction nonetheless is subject to 
section 2257. Otherwise, any depiction of actual child pornography 
could be taken out of the scope of section 2257 by modifying or 
connecting to such an image a depiction of lascivious exhibition of the 
genitals that was produced prior to the compliance date of the final 
rule. A statute passed to enhance prosecution of child pornography 
cannot reasonably be read so as to prevent the prosecution of all child 
pornography offenses through such a simple subterfuge.
    Fourth, a depiction could have been produced prior to the 
compliance date of the final rule that depicted lascivious exhibition 
of the genitals and no other form of actual sexually explicit conduct. 
Suppose that after the compliance date of the final rule, another 
depiction of lascivious exhibition of the genitals were then added, 
whether or not it also displayed any other example of actual sexually 
explicit conduct. The implication of the comment is that the depiction 
contains lascivious exhibition of the genitals that was produced ``in 
part'' before the compliance date of the final rule, and therefore is 
beyond the reach of the final rule. Under this theory, even if the 
after-added actual sexually explicit conduct were in fact child 
pornography, section 2257 could not apply because the earlier image 
contained a depiction of lascivious exhibition of the genitals that was 
produced prior to the compliance date of the regulation. The Department 
disagrees. It will treat each such image separately. The depiction of 
lascivious exhibition of the genitals that was produced before the 
compliance date of the final rule will not be governed by the final 
rule although some of the image was produced after its compliance date. 
This is the case because part of the depiction was produced before the 
compliance date. The connected depiction of actual sexual sexually 
explicit conduct in this example was produced after the compliance date 
of the rule, and must conform to its strictures.
    Fifth, a depiction could have been produced before the compliance 
date of the rule that contained both lascivious exhibition of the 
genitals and actual sexually explicit conduct as it was defined before 
passage of the Adam Walsh Act. Then, following the compliance date of 
the final rule, the depiction could have had appended to it any form of 
actual sexually explicit conduct, including actual child pornography. 
Under the implication of the comment, the depiction would contain, in 
part, lascivious exhibition of the genitals that was produced before 
the compliance date of the Act, and, therefore, none of the material 
would be subject to the final rule. Under this approach, even the 
material that was actual sexually explicit conduct under its pre-Act 
definition would no longer be covered by section 2257. The Department 
disagrees. There is no indication that Congress intended to accomplish 
that result. Under this approach, every example of child pornography--
even those that have been subject to section 2257--could never yield a 
prosecution if it were appended to a depiction of lascivious exhibition 
of the genitals that was produced before the compliance date of the 
final rule. No such result is required. In this circumstance, each 
depiction would be treated separately. The part of the depiction that 
involved only lascivious exhibition of the genitals and was produced 
prior to the compliance date of the final rule would not be subject to 
the final rule. The other parts of the depiction would be subject to 
the final rule, either because they were examples of actual sexually 
explicit conduct as that term was defined before the compliance date of 
the final rule or they were produced after the compliance date of the 
final rule and met the definition of the term as it existed upon that 
compliance date.

Inspections

    Although the proposed rule made no changes to the inspection 
requirements contained in Sec.  75.5, the Department received a number 
of comments on the existing regulations.
    One comment proposes that the amount of time for which business 
premises be open for inspections should not be 20 hours per week as per 
Sec.  75.5(c). The comment says that there is a need to address 
inspection timing where a producer has an entirely separate full-time 
job elsewhere. Two comments, including this one, contend that this 
problem would be eliminated by using third-party record-keepers. Four 
comments state that small businesses in this field work out of their 
homes, and cannot staff their operation for 20 hours per week while 
performing outside employment. These comments also expressed concern 
about inspections occurring in their homes.
    The same question was raised in the context of the rulemaking on 
the prior version of the regulations, and the Department declined to 
accept the comment. See Inspection of Records Relating to Depiction of 
Sexually Explicit Performances, 70 FR 29607, 29614 (May 24, 2005). At 
the time, the Department believed that permitting third-party 
custodianship would unnecessary complicate the inspection process and 
undermine its effectiveness.
    Upon reconsideration, the Department adopts this comment in part. 
The Department now believes that it can still accomplish the purposes 
of the statute--in particular, effective inspections--even allowing for 
third-party custodianship of the records. Hence, although it will not 
modify Sec.  75.5(c), the Department will permit records required under 
part 75 to be held by third parties. By allowing third-party custodians 
to maintain the records, the burden on small businesses is reduced, 
including any fears arising from posting home addresses, where many of 
these small businesses are reported to operate, and any concerns of 
record-keeping inspections of those same premises. In the text of the 
regulation, such a third party is referred to a ``non-employee 
custodian of records'' to distinguish it from the producer and any 
person he may directly employ to maintain the records.
    In addition to this change, in response to one comment, the 
Department has eliminated the requirement that the name of an 
individual be listed on the disclosure statement and has permitted only 
the title to be listed.
    One comment states that section 2257 allows the Attorney General to 
inspect records, and that, therefore, the obligation of the producer is 
to make records available only to ``the Attorney General.'' Section 
75.5(a) allows inspectors other than the Attorney General, and the 
comment claims that the statute does not permit such individuals to 
inspect. The comment further notes that the rule should

[[Page 77446]]

identify the class of persons who are investigators, lest the custodian 
be uncertain concerning which people he should allow to inspect the 
premises. The comment maintains that there is a need for the Department 
to demonstrate to those subject to inspections that the inspection 
authority will not be abused.
    The Department declines to adopt this comment. Under general 
principles of delegation, the Attorney General may delegate to 
subordinate officials the performance of the Attorney General's duties. 
The commenter's fear that under the language of the proposed rule, 
unaccountable or unknown individuals could conduct the record searches 
is therefore unwarranted.
    The Department received thousands of similar comments that note 
that Sec.  75.5(b) provides for inspections without advance notice and 
request that it should instead require such notice. Some commenters say 
producers will not destroy any records if given notice because they 
would then face liability for a missing record. If notice is used to 
put into order records that have not been organized, then the comment 
believes that no legitimate purpose of the record-keeping requirement 
would be harmed by providing notice. The commenters further ask the 
Department to specify the consequences at the premises if no one is 
present when the investigator arrives, such as whether the inspector 
will knock down the door. Two other comments request that the 
Department eliminate no-notice inspections.
    The Department declines to adopt these comments. As it stated 
previously:

    Advanced notice would provide the opportunity to falsify records 
in order to pass inspection. Lack of specific case-by-case notice 
prior to inspection will promote compliance with the statute and 
encourage producers to maintain the records in proper order at all 
times, as is contemplated by the statute. The rule will specify that 
inspections are to occur during the producer's normal business 
hours. The inspection process clearly does not contemplate 
warrantless forced entry solely because no one is present when the 
investigator arrives.

70 FR at 29619.
    The Department received thousands of similar comments that argue 
that non-routine inspections should always require probable cause and a 
search warrant. The Department declines to adopt these comments. These 
inspections are administrative in nature, and, under well-established 
legal principles, no search warrant is required. See id.
    One comment states that a single owner of a home-based Web site 
would be captive in his own home for 20 hours per week. The Department 
responds to this comment by noting that it is permitting required 
records under Part 75 to be held by third parties.
    One comment maintains that the ``reasonable times'' provision of 
Sec.  75.5(c)(1) could mean that an inspection could be made at 2:30 
a.m. if a live Webstream or production work is being conducted then, 
and that such an inspection would interrupt production. Moreover, 
according to the comment, production could be done during the day in 
Europe while it is 2:30 a.m. in the United States, even though it would 
not yet be clear which images will be published and there will not have 
been time to cross-reference. The comment argues that if there is 
probable cause to believe that an underage performer is actually 
working in an off-hours production, the courts can issue warrants 
without the need for any late-night records inspection at all.
    The Department declines to adopt this comment. The ``reasonable 
times'' provision will be applied according to its plain meaning. 
Moreover, the comment misunderstands the nature of the statutory 
requirement which the rule implements. The goal of the record-keeping 
regime is not to intervene to stop crimes involving underage performers 
that have already occurred. Rather, the point of the record-keeping is 
to prevent victimization in the future. The inspection requirement is 
designed to ensure that the prophylactic identification- and age-
verification measures are complied with.
    One comment concerning the four-month interval for inspections 
states that although some large entities or a custodian arrangement may 
warrant inspections as often as every four months, the many small 
production operations with small numbers and static images do not. It 
claims that inspections of such entities that occurred with such 
frequency would simply mean that inspectors would review the same 
images, which it contends is an invitation to harassment. The 
Department responds to this comment by noting that while inspections 
may take place as often as every four months, they are not required to 
occur so frequently. Moreover, the regulation requires that inspections 
``be conducted so as not to unreasonably disrupt the operations of the 
establishment.''
    One comment notes that Sec.  75.5(c)(4) specifies what the 
investigator may say at the end of an inspection, and what the producer 
is permitted to say. The comment expresses that the regulations should 
also include a statement that the authority to search does not include 
the authority to require that any questions be answered. The comment 
also maintains that the regulation should say that everyone on the 
premises is free to leave before or during a records inspection. If 
everyone is not free to leave, the comment believes that the rule 
should say so and include the constitutional safeguards appropriate for 
custodial investigation situations.
    The Department declines to adopt this comment. Administrative 
inspections are not custodial investigations that would require 
advisories concerning the right to counsel or to avoid self-
incrimination.
    One comment states that the Department should consider 
``legislation'' forbidding anyone other than a custodian or a 
Department investigator from moving, disturbing, or interfering with 
the required records in any way. It contends that the integrity of the 
records, including their cross-referencing, otherwise could be 
disturbed. The comment also asks that this notice clarify that the 
seizure or theft of some or all of the records does not require the 
cessation of any ongoing or planned ``expression.'' If the seizure did 
have this effect, according to the comment, then the records would have 
to be returned within 24 hours so that ``expression'' could promptly 
resume.
    The Department declines to adopt this comment. The Department has 
no evidence that unauthorized individuals have interfered with records 
or that there is a serious risk of such interference occurring in the 
future. (The Department also notes that it lacks the authority to enact 
laws, and that its authority is limited to executing laws, including 
through the publication of implementing regulations such as this one.)
    One comment posits that searches under section 2257 have not 
identified any underage performers, so their purpose cannot be to catch 
and prosecute people who arrange for such performances. It claims that 
no producer knowingly uses underage performers, and that section 2257 
is an after-the-fact tool, not one that advances prevention.
    The Department does not adopt this comment. It does not agree that 
no producer knowingly uses underage performers. On the contrary, the 
Department's successful prosecution of child pornography cases every 
year proves that some producers do knowingly or recklessly use underage 
performers. Further, as discussed above, the Department believes that 
section 2257 is in fact preventive because it ensures that before any 
production occurs, the producer undertakes steps to ensure that the 
performers are of legal

[[Page 77447]]

age. Finally, the purpose of the regulation in large part is to prevent 
unknowing use of underage performers.

Location of Records

Statement of Location of Books and Records

    The proposed rule changes the requirement under Sec.  75.6(a) that 
producers place on every ``copy'' of a depiction of sexually explicit 
conduct a statement that indicates the location of books and records. 
Under the current regulation, that statement could be contained in a 
label or a hyperlink. The proposed rule would require that the 
definition of ``copy'' mean that the producer must attach a ``statement 
describing the location of records * * * [that is to] be affixed to 
every page of a Web site (controlled by the producer) on which visual 
depictions of sexually explicit conduct appear.''
    One comment argues that an exemption statement is not required if a 
depiction is produced by foreign producers who did not intend at the 
time of production for the depiction to enter the United States market.
    The Department does not adopt this comment. Determining when the 
producers of the foreign production intended to distribute the 
depiction in the United States would be essentially impossible, leaving 
producers free to claim that they had no such intention on the date of 
original production. If the depiction is made available in the United 
States, then the disclosure statement is required, regardless of the 
intent at the time of production.
    Eleven comments claim that the proposed rule's change to including 
the statement on every page could lead to harassment of Web page 
operators who operate their sexually explicit businesses out of their 
homes, potentially resulting in physical injury, stalking, burglary, or 
identity theft. They say that placing a link on the Web page 
constitutes affixing the copy to a Web page but avoids harassment risk 
because the exposure of the custodian's name will be limited to people 
who are seriously seeking the records information. Two commenters raise 
their concerns that sharing this information with secondary producers 
could result in the same harms and ask that secondary producers not 
keep this information. Nine comments raise similar harms as potentially 
occurring to performers if the location of the records were placed on 
every page. One comment expresses concern that the primary producer's 
sharing with others of the addresses and other contact information 
could make it liable for how the information might be used by others, 
including crimes against the performers. Two comments request that the 
secondary producer's home address not appear on the disclosure 
statement, while another comment recommends that the secondary 
producer's street address be included but not the street address of the 
primary producer, which would keep the secondary producer's statements 
of locations of records from being unmanageably long due to the 
inclusion of other producers' locations. One comment states that the 
proposed rule will greatly increase exposure of identification of 
producers, chill protected speech, and serve the rule's purpose no 
better than a link would.
    One comment reported that Web sites based on static pages would 
have to manually update every page if changes must be made to the 
compliance notice, such as the publication date, business address, 
producer name, and custodian name. Each update would cause the 
potential for error, and each honest mistake could result in 
prosecution. Although dynamic sites could more easily update the 
compliance notice, extra processing by the Web site server would be 
necessary, which is costly. There would be a considerable extra load on 
the server for individual page compliance, according to the comment, 
and dynamic pages will face technical challenges if operators of such 
Web sites are to comply.
    The Department adopts these comments in part. The Act requires that 
the location of the records must appear on each ``copy'' of a depiction 
of sexually explicit conduct, meaning every Web page for Internet 
sites. The Department believes that its final rule allowing producers 
to place records in the care of third-party custodians will obviate any 
harms to performers that might otherwise occur due to disclosure of the 
address where the records are kept. It also will amend the final rule 
to permit the posting of a link or ``mouseover'' on each Web page to 
satisfy the requirement that every page of a Web site provide the 
location where the required records are stored.
    Five comments say that a hyperlink text to a full statement that 
can be updated as needed would fulfill the purpose of the proposed 
rule. The hyperlink would appear on each page. One of these comments 
notes that the Act requires that a notice appear on every page on which 
a depiction appears, but that notice could still appear in a dedicated 
link. It claims that although the Act required that the notice appear 
on every page, the Act did not alter the manner in which the notice is 
presented. One comment says that the Web site could use an 
appropriately labeled link that opens to several pages of disclosure 
statements or an elaborate table of disclosure statements. Producers 
could use a series of links to keep individual disclosure statements 
close to the galleries to which they relate. One comment believes that 
one notice linked to every page of a site provides everything the 
Department needs to enforce the statute by identifying the responsible 
record and the place where the records are located.
    Four comments claim that the requirement that a notice appear on 
every page would ruin the aesthetics of the Web site. Attention of 
viewers is measured in seconds, according to these comments, and 
clutter will harm gaining attention. One comment thought that a 
solution to the aesthetics problem would be to avoid having the 
disclosure statement appear on the face of the image, so as not to 
increase the size of the image files or to harm the integrity of the 
image itself. If the disclosure statement appeared in a comment field 
within the digital file, at a defined location, then both the producer 
and the Department would know where it could be found, the comment 
concluded.
    The Department adopts these comments in part. Without accepting as 
valid every fear that the comments raise, the Department does believe 
that the language in the proposed rule, and even its comments at 72 FR 
at 38035, allow it to require a less-burdensome disclosure statement 
than commenters anticipated by eliminating language in the current 
regulation that permitted a home page statement or hyperlink on that 
page. Although the current regulations that allow such a statement to 
be placed only on the home page cannot be squared with the statutory 
changes, the Department does believe that the Act would permit the 
required statement that appears on each page to be a hyperlink that 
contained all the statutorily required record-keeping compliance 
information. By adopting this change, the Department believes that it 
will respond to essentially every concern that a comment raised 
regarding privacy, threats, aesthetics, or computer technology.
    Seven comments state that moving the disclosure statement from the 
main page to every page is unnecessary and a nuisance. One comment says 
that each printed page is necessary for records and books, but an 
explanation is needed for applying this mandate to electronic media. 
Another comment thought that the disclosure statement could be affixed 
to a magazine or other printed matter in the same fashion as a 
shoplifting tag, not printed on the copy

[[Page 77448]]

itself, and that only movies would actually require appearance of the 
statement on the work itself. Two comments state that the existing 
requirement of a disclosure statement on the homepage or principal URL 
of a Web site has worked well and that there is no need for it to 
appear on each and every Web page where the triggering content appears.
    Two comments state that it is impossible to apply the requirement 
that the disclosure statement appear on every Web page to live Web 
casts. Another contends that it is unrealistic to expect a separate 
disclosure statement or a separate line in a disclosure statement for 
every separate work that is placed on each and every Web page. One 
comment notes that for composite works, there are thousands of images 
often organized into separate galleries. A Web page could have an index 
page with 100 images that were produced on different dates, according 
to the comment, and that more generality should be allowed in the 
statement.
    The Department declines to adopt these statements. Section 
2257A(e)(1) requires that a statement describing where the records are 
located ``shall cause to be affixed to every copy,'' and provides 
specifically that ``the term `copy' includes every page of a Web site 
on which matter describes in subsection (a) appears.'' The Department 
must issue regulations implementing the statute, and it is prevented 
from adopting those comments asking that each page not be required to 
contain the disclosure notice, or stating that such notices are 
unnecessary, that notices should be able to appear on a separate tag, 
or that it is unrealistic to expect that each Web page will contain a 
disclosure notice. And because the statutory requirement applies to 
``[a]ny person to whom subsection (a) applies,'' the Department may 
exempt neither primary producers, secondary producers, nor producers of 
live Web casts. As noted in the proposed rule, and finalized in this 
rule at Sec.  75.2(a)(1), however, producers of live Web casts may 
satisfy the requirement by ``includ[ing] a copy of the depiction with 
running-time sufficient to identify the performer in the depiction and 
to associate the performer with the records needed to confirm his or 
her age.''
    One comment states that the records should require not the name and 
address of the individual, but a title, since the name of the relevant 
individual changes over time. The comment believes that such a change 
would avoid an invasion of privacy if the person maintaining the 
records is a performer. The comment believes that this is the same 
privacy interest that led the Department in the proposed rule to redact 
non-essential information from copies of performers' identification 
cards before providing secondary producers with copies of records. The 
Department believes that its allowance of the keeping of the records by 
third-party custodians eliminates any possibility of invasions of 
privacy of this type. The Department also accepts the comment's view 
that the title of the custodian could be provided rather than the name 
of a specific individual, since the responsible person could change 
over time, otherwise requiring that each existing disclosure statement 
be changed.
    One comment expressed the view that the disclosure statement should 
provide information concerning the date of photography and the name, 
address, and title of a person who produced it, including its insertion 
into a Web page, and state the name of the person responsible for 
maintaining the records. The Department declines to adopt this comment, 
because the Department does not believe it is necessary for the 
disclosure statement to contain all of this information. Instead, the 
Department believes that the objectives of the statute are advanced 
through the rule's record-keeping requirements, which will ensure that 
the necessary information is available, while at the same time reducing 
the burdens on entities compared to those that would be imposed by 
additional requirements concerning the disclosure statement.
    One comment recommends that the existing regulations on the 
appearance of the disclosure statement contained at Sec.  75.6(e) 
should be changed. It contends that the typeface requirements are 
inadequate because point size is an objective criterion. It would 
prefer that the regulation specify how large the type should be but not 
how large it is compared to other printing. It also argues that a 
point-measured minimum size is irrelevant on a computer site because 
the appearance of the text will depend on the settings of each monitor 
displaying it.
    The Department has declined to adopt this comment. Precisely 
because typeface appearance can vary, the Department believes that it 
is important to require that disclosure-statement typeface be a certain 
size compared to other printing. Because the size of computer screens 
and their settings tend to vary little among the general public, the 
Department concludes that specifications governing the size of type 
should be retained.
    One comment asks which entity bears the obligation of providing a 
disclosure statement when one Web site frames content originating from, 
and wholly contained on, the servers of another producer, where the 
content is selected and changed in the originator's sole and exclusive 
discretion. The Department states that where a Web site operator 
operates as a producer, even as a secondary producer, it must comply 
with the disclosure statement requirements of the final rule. Where a 
Web site operator is a distributor, it need not comply with those 
requirements.

Date of Original Production

    The proposed rule also would require that the date of original 
production be among the records that are required to be contained in 
the statement describing the location of books and records. One comment 
argues that it is sensible to use the date of first production because 
this is the date that matters for the production of child pornography, 
to which the records relate, and which would determine when the record-
keeping obligations expire. However, this comment states that the date 
of original production should not appear on the disclosure statement 
because it is important only once the performers' dates of birth are 
known. Since that information is not a part of the disclosure 
statement, the comment states that inclusion of the production date 
makes no sense. The commenter suggests requiring that the records 
referred to in the disclosure statement themselves detail the relevant 
production dates: The earliest date that the primary producer created 
any sexual image depicted of each performer.
    As noted above, the Department adopts this comment.

Location of the Statement

    One comment requests that the Department describe how the rules 
requiring a statement apply to simulated sexually explicit material on 
digital video discs (DVDs) that are divided into different segments, 
such as bonus material. The regulations at Sec.  75.8, the comment 
notes, tell what should be done where end credits exist, but often such 
bonus material has no end credits. The comment advocates that Sec.  
75.8(e) should apply in this circumstance rather than Sec. Sec.  
75.8(b) and (c). The comment also asks the Department to conclude that 
the statement can appear at the end of each item of bonus material 
available, or if identical for all materials, in a separate dedicated 
menu option that opens the statement.
    The Department adopts this comment and has clarified in the final 
rule that for purpose of Sec.  75.8, a DVD containing

[[Page 77449]]

multiple depictions is a single matter for which the statement may be 
located in a single place covering all depictions on the DVD. This is 
analogous to a magazine containing multiple depictions, per Sec.  
75.8(a), locating the statement on a single page.
    Two comments state that some Web sites contain thousands of pages 
of constitutionally protected visual depictions and other content. They 
question whether producers would be required to display thousands of 
disclosure statements, especially when so many different depictions can 
appear on one site. They contend that affixing disclosure statements to 
thousands of depictions would create a stigma based on an ambiguous 
definition of lascivious exhibition in one picture out of thousands.
    The Department does not adopt these comments. If any entity 
operates a Web site that contains thousands of pages of depictions of 
sexually explicit conduct, then those entities are required by law to 
display thousands of disclosure statements. As noted, the Department in 
this final rule is permitting those statements to appear as hyperlinks. 
The number of depictions on a site is not the relevant issue, but 
whether on a particular Web page there appears one or more such 
depictions. If the owner of a Web site chooses to display thousands of 
depictions on one Web page and one of those is a depiction of 
lascivious exhibition, then that Web page must contain a disclosure 
statement. The comments offer no evidence to support a view that such a 
statement would create a stigma, nor does the Department believe that 
``lascivious exhibition'' is defined ambiguously. Any person who 
believes that only one depiction among thousands is of lascivious 
exhibition can display that depiction on a Web page unto itself. 
Moreover, a studio or any other entity that conforms to section 2257A's 
certification safe harbor will not face the situation that these 
comments hypothesize.
    These comments also ask the Department to delay the compliance date 
of the disclosure statement until the Department issues its regulations 
effectuating the safe harbor of section 2257A, which may apply to the 
entities referenced in the comments. The Department believes that 
Congress intended that the safe harbor was to be available to entities 
who qualified for its operation in a manner that would preclude the 
need for such entities to conform to the disclosure and record-keeping 
requirements. Therefore, as noted earlier, the Department adopts this 
portion of the comments.
    One comment specifically requests that the current language of 
Sec.  75.8(d) that permits a hyperlink on the homepage of a URL be 
retained. The Department declines to adopt this comment. The Act 
requires a disclosure statement on each page of a Web site. As noted 
above, however, the Department will allow that statement to appear as a 
hyperlink that is displayed on each page that depicts sexually explicit 
conduct.
    One comment asks that if the Department allows a hyperlink on the 
index page, that it make clear where the disclosure hyperlink should 
appear since the first page may not contain any covered depiction. 
Because the Department does not adopt the view that the Act permits the 
appearance of a hyperlink only on an index page, it does not adopt this 
comment.
    Two comments ask whether the disclosure statement that the Act 
requires for each page depicting actual sexually explicit conduct 
applies to every page of such Web site, or only the pages that contain 
actual sexually explicit conduct. The Department responds to this 
comment by referencing that the plain language of section 2257A(e)(1) 
of the Act provides that a disclosure statement must appear on ``every 
page of a Web site on which matter described in subsection (a) 
appears.''
    One comment asks what the word ``matter'' means, and the Department 
again references the plain language of the Act in subsection (a), which 
refers to depictions of sexually explicit conduct. Another comment asks 
whether a Web site is a ``matter'' subject to regulation and, if so, 
whether each of its elements is an individually ``matter'' for such a 
purpose. It also inquires whether a Web site as a whole is a ``matter'' 
or whether it is simply an amalgamation of many matters, and whether 
the Department is requiring many different disclosure statements 
because a Web site has many different pages.
    The Department answers this comment by stating that it requires 
many different disclosure statements only when a Web site displays many 
different depictions of sexual explicit conduct. The Act requires that 
when any page of any Web site depicts any sexually explicit conduct--
''matter'' as contained in subsection (a)--then the page must contain a 
disclosure statement. Hence, it is not the Web site or its pages that 
is a ``matter,'' but the depiction itself.
    One comment related that neither the statute nor regulations define 
a ``Web page.'' The comment says that the term could mean a screen that 
appears on a computer, an HTML document on the Internet, or anything 
covered by a single URL. The comment suggests that a definition is 
needed to avoid vagueness and provides a list of 28 definitions of the 
term.
    The Department declines to adopt this comment. The use of the term 
``Web page'' in the regulation predates the amendment of the statute in 
the Act, and the lack of a definition of ``Web page'' was not 
previously raised in the comments in the rulemaking for the 2005 
version of the regulation. That is the case even though the definition 
of ``URL'' was commented upon, and responded to by the Department. See 
70 FR and 29610. This confirms the Department's belief that a 
definition of the term is not needed for compliance with the 
regulation.
    The same comment contends that it would be impractical and 
unnecessary to require the disclosure statement to appear on the screen 
during the playing of a video clip that depicts actual sexually 
explicit conduct. The Department does not accept this comment. It 
refers the commenter to the terms of existing Sec.  75.8(b), which 
describes where the disclosure statement must appear for a motion 
picture or videotape.

Exemption Statement

    One comment states that there should not be an exemption statement 
under Sec.  75.7. Even in the presence of such a statement, the comment 
contends that the government must still prove all the elements of an 
offense. It says that many depictions are not required to contain a 
disclosure statement--not just ones produced before the compliance 
date, but also later depictions for which the record-keeping period has 
expired. The comment also maintains that no such exemption statement is 
required if a depiction is foreign-produced by producers who did not 
intend at the time of production for the depiction to enter the United 
States market, or by married couples who produce videotaped images of 
themselves for their own personal use.
    The Department declines to adopt these comments. It does not agree 
that foreign-produced materials will not require disclosure statements 
if they were not intended to be made available in the United States at 
the time of production. Determining when the producers of the foreign 
production intended to distribute the depiction in the United States 
would be essentially impossible, and even if it were possible to do so, 
producers would simply claim that on the date of original production, 
no such intent had manifested itself. If

[[Page 77450]]

the depiction is made available in the United States, then the 
disclosure statement is required, regardless of the intent at the time 
of production. With respect to personal use, the Department does not 
construe section 2257 and part 75 to encompass an adult couple's 
recording of its intimate activity for the couple's private use in the 
home.

Exemption From Statutory Requirements With Respect to Visual Depictions 
of Lascivious Exhibition and of Simulated Sexually Explicit Conduct In 
Certain Circumstances and Associated Certification Regime

    As outlined above, Congress in the Act filled two gaps left by the 
original section 2257 by amending section 2257 to cover lascivious 
exhibition and by enacting section 2257A to cover simulated sexually 
explicit conduct. In enacting section 2257A, Congress determined it 
would be appropriate, in certain circumstances, to exempt producers of 
visual depictions of lascivious exhibition (for which records must be 
kept under section 2257, as amended by the Act) and producers of visual 
depictions of simulated sexually explicit conduct (for which records 
must be kept under section 2257A) from statutory requirements otherwise 
applicable to such visual depictions. See 18 U.S.C. 2257A(h).
    The safe harbor provision in the statute in essence permits certain 
producers of visual depictions of lascivious exhibition or of simulated 
sexually explicit conduct to certify that in the normal course of 
business they collect and maintain records to confirm that performers 
in those depictions are not minors, although the records may not 
necessarily be collected and maintained in the format required by part 
75. Where a producer makes the required certification, matter 
containing such visual depictions is not subject to the labeling 
requirements of the statute.
    In the proposed rule, the Department crafted a certification regime 
(described in detail below) that would have implemented the safe harbor 
in such as way as to permit such producers, in accordance with the 
statute, to be subject to lesser record-keeping burdens than those in 
part 75, while still protecting children from sexual exploitation. Four 
comments recommend several major changes to the certification 
provision. These comments are described below.

Who May Certify

    Any entity that meets the statutory requirements for eligibility, 
which are incorporated verbatim in the proposed rule, may certify that 
it meets the requirements of section 2257A(h). In addition, an entity 
may certify for itself and all sub-entities that it owns or controls. 
The names of all sub-entities covered must be listed in such 
certification, however, and must be cross-referenced to the matter for 
which the sub-entity served as the producer.
    Both United States and foreign entities may certify. In the case of 
a certification by a foreign entity, the foreign entity, which may be 
unlikely to collect and maintain information in accordance with United 
States federal and state tax and other laws, may certify that it 
maintains the required information in accordance with their foreign 
equivalents. The Department considers the statute's use of a broad 
description of laws and other documentation that would satisfy the 
certification to provide authority for this permission to foreign 
entities.
    The proposed rule would have required that the certification be 
signed by the chief executive officer of the entity making the 
certification, or in the event an entity does not have a chief 
executive officer, the senior manager responsible for overseeing the 
entity's activities.
    One comment recommends that due to chief executive officers' 
demanding schedules, other executive officers should be able to sign 
the certification. The Department adopts this comment.
    One comment urges the Department to confirm that if an entity 
produces both materials that are and are not covered by the 
certification regime, the entity is not disqualified from using the 
certification regime for covered materials. The Department adopts this 
comment.
    The certification regime in the proposed rule was similar for 
producers of lascivious exhibition and producers of simulated sexually 
explicit conduct, but differed in some material respects, as described 
below.

Time Period for Certification

    The proposed rule would have required the certification to be filed 
every two years. The Department could have chosen a shorter period for 
certification, a longer period, or a permanent certification. The 
Department believed, however, that two years is a reasonable period, as 
it would ensure that certifications remained up-to-date without 
imposing overly onerous burdens on regulated entities.
    One comment recommends the elimination of proposed Sec.  75.9(e), 
which would require certifications every two years. The comment points 
out that if the requirement to list the titles of works covered by the 
certification and other related information were deleted, it would not 
be necessary to require producers to submit certifications every two 
years. Instead, the Department could simply require re-certification if 
there are material changes in the information the producer certified 
under Sec.  75.9(c)(1) and (2) concerning how the producer collects and 
maintains information concerning its employees who perform in its works 
covered by the certification regime.
    The Department adopts this comment. As explained below, as the 
Department adopts various comments concerning the information to be 
provided in the certification under Sec.  75.9, it is not necessary to 
require producers to re-certify every two years. It is, however, still 
necessary to establish certifications on the record as soon as 
possible. Accordingly, the Department will require an initial 
certification due 180 days after the publication of this proposed rule 
as a final rule. This will provide sufficient time for entities to 
determine if they wish to certify and to come into compliance with the 
certification requirements. Initial certifications of producers who 
begin production after the publication of this proposed rule but before 
the expiration of the 180-day period following its publication as a 
final rule are due on the last day of the 180-day period. Initial 
certifications of producers who begin production after the expiration 
of the 180-day period are due within 60 days of the start of 
production. In any case where a due date or last day of a time period 
falls on a Saturday, Sunday, or federal holiday, the due date or last 
day of a time period is considered to be the next day that is not a 
Saturday, Sunday, or federal holiday.

Enforcement of the Certification

    All of the statements in the certification are subject to 
investigation. The proposed rule stated that ``a false certification 
will result in a violation of section 2257A and potentially other 
criminal statutes.'' See 72 FR at 32266.
    One comment asks the Department to clarify that a ``false 
certification'' is one that is knowingly and willfully false, and to 
specify the criminal statutes that may be violated by such a false 
certification.
    The Department adopts this comment. The federal statute 
criminalizing a false certification is 18 U.S.C. 1001, which requires 
that a statement be knowingly and willfully false. Depending on the 
facts of a particular case, however, a person submitting a false 
certification could violate other federal statutes. The Department 
notes that a false certification would necessarily result in

[[Page 77451]]

a violation of sections 2257 or 2257A if a producer submitting that 
false certification did not comply with the record-keeping provisions 
of the relevant statute.

Form and Content of the Certification

    The certification regime in the proposed rule requires that a 
producer provide a letter to the Attorney General that:
    (1) Sets out the statutory basis under which it and any relevant 
sub-entities are permitted to avail themselves of the safe harbor;
    (2) Certifies that regularly and in the normal course of business, 
the producer, and any relevant sub-entities collect and maintain 
individually identifiable information regarding all performers employed 
by the producer who appear in visual depictions of simulated sexually 
explicit conduct or of lascivious exhibition;
    (3) Lists the titles, names, or other identifying information of 
visual depictions (or matter containing them) that include non-employee 
performers;
    (4) Lists the titles, names, or other identifying information of 
visual depictions (or matter containing them) produced since the last 
certification;
    (5) Certifies that any foreign producers of visual depictions 
acquired by the certifying entity either maintain the records required 
by section 2257A or have themselves provided a certification to the 
Attorney General, and the producer making the certification has copies 
of those records or certification; or, for visual depictions of 
simulated sexually explicit conduct only, has taken reasonable steps to 
confirm that the performers are not minors;
    (6) Lists the titles, names, or other identifying information of 
the foreign-produced visual depictions (or matter containing them) that 
include performers for whom no information is available but for whom 
the U.S. entity has taken reasonable steps to confirm that the 
performers are not minors; and
    (7) Certifies that U.S. primary producers of visual depictions 
acquired by the certifying entity either maintain the records required 
by section 2257A or certify themselves under the statute's safe harbor, 
and that the producer making the certification has copies of those 
records or certification(s). See 28 CFR 75.1(c)(1).
    The Department received several comments on the certification 
provisions of the proposed rule. These comments are discussed below in 
turn.
    One comment states that the Department should prepare a form for 
the certification instead of requiring producers to submit a letter.
    The Department declines to adopt this comment. As outlined below, 
the Department has simplified the requirements for the certification in 
response to comments received. Accordingly, the short letter that would 
be required would not be significantly more burdensome on producers, if 
at all, than requiring producers to fill out a form.

Statutory Basis for the Certification

    The first requirement is straightforward--the entity providing the 
certification must state why it is entitled to certify under the terms 
of the statute. This will include citation to the specific subsections 
of the statute under which it is making the certification and to basic 
evidence justifying that citation. Specifically, the letter should 
either: (i) Cite 18 U.S.C. 2257A(h)(1)(A) and 28 CFR Sec.  75.9 and 
state that the visual depictions listed in the letter are ``intended 
for commercial distribution,'' ``created as a part of a commercial 
enterprise'' that meets the requirements of 18 U.S.C. 
2257A(h)(1)(A)(ii), and are ``not produced, marketed or made available 
* * * in circumstances such tha[t] an ordinary person would conclude 
that * * * [they] contain a visual depiction that is child pornography 
as defined in section 2256(8)''; or (ii) cite 18 U.S.C. 2257A(h)(1)(B) 
and 28 CFR Sec.  75.9 and state that the visual depictions listed in 
the letter are ``subject to regulation by the Federal Communications 
Commission acting in its capacity to enforce 18 U.S.C. 1464 regarding 
the broadcast of obscene, indecent or profane programming'' and are 
``created as a part of a commercial enterprise'' that meets the 
requirements of 18 U.S.C. 2257A(h)(1)(B)(ii).
    No comments were received on this provision.

Certification of Collection and Maintenance of Records

    The second requirement is the certification under either subsection 
2257A(h)(1)(A)(ii) or (B)(ii). Under either subsection, the certifier 
must demonstrate its compliance with five elements: that the entity (1) 
``regularly and in the normal course of business collects and 
maintains'' (2) ``individually identifiable information'' (3) 
``regarding all performers, including minor performers employed by'' 
the entity (4) ``pursuant to Federal and State tax, labor, and other 
laws, labor agreements, or otherwise pursuant to industry standards'' 
(5) ``where such information includes the name, address, and date of 
birth of the performer.'' The Department will consider any entity's 
procedures that include these basic elements to be in compliance with 
the certification.
    One comment states that the proposed rule's certification statement 
is inconsistent with the statutory safe harbor provision because it 
requires the producer to certify that it maintains records concerning 
all performers employed by the producer who appear in depictions of 
simulated sexually explicit conduct or lascivious exhibition, whereas 
the statute permits a blanket certification as to all performers 
employed by the producer. The comment then states that requiring the 
producer to certify only as to performers who appear in visual 
depictions of simulated sexually explicit conduct or lascivious 
exhibition would first require the producer to determine which 
depictions may contain simulated sexually explicit conduct or 
lascivious exhibition, which would be difficult and time-consuming 
(another comment also notes the ``troubling'' nature of requiring 
producers to determine what materials depict lascivious exhibition or 
simulated sexually explicit conduct ``given the vagueness of the 
definitions for these terms''). Moreover, the comment states that the 
proposed rule would be inconsistent with Congressional intent because 
it would deny producers the ability to make the blanket certification 
contemplated by the statute. The comment also states that a blanket 
certification will better serve the Department's goals than a tailored 
certification. The comment thus recommends that the certification 
language at Sec.  75.9(c)(2) be revised to end at ``all performers 
employed by [name of entity],'' deleting ``who appear in visual 
depictions of simulated sexually explicit conduct or of lascivious 
exhibition of the genitals or pubic area.'' The comment makes a 
conforming recommendation that the definitions of ``regularly and in 
the normal course of business collects and maintains'' and ``all 
performers, including minor performers'' at Sec.  75.1(p) and (r), 
respectively, be amended to clarify that the certification applies to 
all performers a producer employs, not just those appearing in 
depictions of lascivious exhibition or simulated sexually explicit 
conduct.
    The Department adopts this comment. Section 75.9(c)(2) in the final 
rule thus has been amended to end at ``all performers employed by [name 
of entity].'' Sections 75.1(p) and (r) in the final rule have also been 
amended pursuant to the comment.

[[Page 77452]]

List of the Titles, Names, or Other Identifying Information of Visual 
Depictions That Include Non-Employee Performers

    As an extra precaution against evasion, the proposed rule's third 
requirement would have been a list of all visual depictions or matter 
containing visual depictions in which non-employees have engaged in 
sexually explicit conduct. This would have provided the Department with 
notice and a record that such visual depictions by the producers exist 
and, if necessary, would have enabled the Department to investigate the 
bona fides of the certifying entity. The Department believed the list 
would not be so burdensome as to have defeated the purpose of the 
certification regime--namely, reducing the burden of the record-keeping 
requirements otherwise imposed in part 75. Rather than maintaining age-
verification records, copies of each performance, etc., the certifying 
entities would have needed only to provide a list of their productions 
that include depictions of lascivious exhibition or simulated sexually 
explicit conduct by non-employee performers.
    Four comments state that this provision, Sec.  75.9(c)(3) of the 
proposed rule, is overly burdensome, not contemplated by the statute, 
and should be stricken. Four comments also state that Sec.  75.9(c)(4) 
and (6) should be stricken, while three comments state that Sec.  
75.9(c)(5) and (7) should be stricken. Because these comments generally 
apply to Sec.  75.9(c)(3) through (7) of the proposed rule, the 
Department will summarize and respond to them all here rather than 
repetitively throughout the preamble.
    These comments make various claims, described below, in seeking the 
deletion of these provisions. First, these provisions go beyond the 
statutory requirements for the certification by requiring the producer 
to determine whether materials depict lascivious exhibition or 
simulated sexually explicit conduct. Second, these provisions are 
inconsistent with the statutory requirements for the certification by 
requiring the producers to make lists, whereas the statute does not 
mention lists at all. Third, the list requirements would likely be 
found unconstitutional because they would result in eviscerating the 
statutory safe harbor: By limiting the safe harbor to producers who go 
through the burdensome process of identifying which materials depict 
lascivious exhibition or simulated sexually explicit conduct, the 
proposed rule would impose substantial content-based restrictions on 
protected speech, with the result that the government would interfere 
with protected speech in the name of targeting unprotected speech. 
Fourth, unlike other provisions of the relevant statutes, which 
expressly permit the Department to specify the records that must be 
kept and how they must be maintained, section 2257A(h) does not provide 
the Department any flexibility as to what a producer must certify to be 
eligible for the safe harbor. Fifth, the list provisions are 
inconsistent with Congressional intent that once a producer makes the 
certification required by statute, it should ``not be subject to the 
more burdensome requirements of this statute.'' Sixth, much ``back 
office'' work will be required to enable producers to have a reasonable 
basis for the expansive certifications required. Seventh, while the 
certification process as outlined in the proposed rule may be less 
burdensome than full record-keeping under part 75, the difference is 
only a matter of degree, as the amount of information required to 
complete a certification under the proposed rule would be significant.
    The Department adopts these comments in part, and will strike Sec.  
75.9(c)(3), (4), (6), and (7) from the final rule. As explained below, 
the Department will amend Sec.  75.9(c)(5) in the final rule rather 
than striking it entirely.

List of the Titles, Names, or Other Identifying Information of Visual 
Depictions Produced Since the Last Certification

    The fourth requirement in the proposed rule would have provided the 
Department with both a notice and a record regarding which depictions 
or matters are subject to the certification. In drafting the proposed 
rule, the Department considered simply allowing entities to make a 
blanket assertion that they maintain the required records on all 
employees who perform in all matter they produce. The Department 
initially determined, however, that depiction-specific information 
would enable investigators more easily to determine whether a visual 
depiction is covered by the section 2257A certification regime. The 
list submitted by a certifying entity would have included the titles, 
names, or other identifying information of visual depictions acquired 
by the certifying entity from foreign or U.S. primary producers.
    As noted above, the Department is adopting comments to strike this 
provision from the final rule.

Certification for Entities Acquiring Foreign-Produced Matter

    The fifth requirement in the proposed rule was a subsidiary 
certification for entities acquiring matter subject to the record-
keeping requirements from foreign producers. The Department understands 
that many producers in the United States acquire films and other matter 
that may contain visual depictions of lascivious exhibition or 
simulated sexually explicit conduct from producers abroad. In order to 
produce that matter for the U.S. market and comply with the law, the 
U.S. entity acquiring the matter must certify either that the foreign 
producer in the first instance maintained the records required by the 
statute and that the U.S. entity has copies of those records, or that 
the foreign entity has certified on its own that it (the foreign 
producer) maintains foreign-equivalent records in the normal course of 
business, and that the U.S. entity has a copy of that certification. 
The Department believes it is appropriate for the exemption to apply 
based on certifications that foreign producers maintain foreign-
equivalent records because foreign countries generally have tax and 
employment laws requiring identification of employees that are 
substantially similar to requirements under U.S. law.
    There may be cases where a U.S. entity acquires foreign-produced 
matter and cannot certify the information above. In such a case, the 
U.S. entity would not be able to produce the matter in the United 
States. Denying the market in the United States access to a large 
amount of foreign-produced matter, however, could be construed as a 
burden on American citizens' First Amendment rights to free expression. 
At the same time, the Department cannot risk permitting either foreign 
children to be exploited in the visual depictions produced for the U.S. 
market or evasion of the statute by unscrupulous U.S. producers.
    Therefore, U.S. entities making the certification may certify that, 
to the extent that they have acquired visual depictions or matter 
containing visual depictions of simulated sexually explicit conduct 
from foreign entities, and, to the extent that the primary foreign 
producer does not either maintain the records required by the statute 
or provide a certification to the Attorney General itself, the entity 
making the certification has made reasonable efforts to ensure that no 
performer in any such foreign visual depiction is a minor.

[[Page 77453]]

    One comment describes as vague and unreasonably burdensome the 
proposed rule's certification at Sec.  75.9(c)(5) that U.S. secondary 
producers take ``reasonable steps to confirm'' that performers in 
foreign works are not minors. The comment states that the Department 
should either impose a lesser standard, such as a good faith belief 
that the foreign work does not depict minors, or specify what is meant 
by ``reasonable steps.'' The comment suggests that ``reasonable steps'' 
could include reliance on representations and warranties from a foreign 
producer. Another comment makes the same points, stating that if the 
proposed rule's Sec.  75.9(c)(5) is not stricken, the section should be 
amended to specify what constitutes ``reasonable steps'' and that such 
steps should not impose a duty to investigate but rather should permit 
reliance on a review of the work itself and/or reliance on a 
representation or warranty of the foreign producer. This comment also 
notes that the certification as to the age of the performers should 
explicitly state that the performer was not a minor at the time the 
visual depiction was produced.
    The Department adopts these comments to the extent they recommend 
clarification of ``reasonable steps,'' with the caveat that any review 
of the materials or reliance on the representations made by a foreign 
producer must itself be in good faith. The Department also adopts these 
comments to the extent they recommend the certification be revised to 
state the performer's age at the time the visual depiction was 
originally produced. Accordingly, the corresponding section in the 
final rule (designated as Sec.  75.9(c)(3) due to the deletion of the 
proposed rule's Sec.  75.9(c)(3) and (4)) will explain that reasonable 
steps may include, but are not limited to, a good-faith review of the 
material itself or good-faith reliance on representations and 
warranties from a foreign producer, and the certification will be 
revised to state that the performers were not minors at the time the 
visual depiction was originally produced.
    One comment states that the proposed rule's Sec.  75.9(c)(5) would 
require a producer to take affirmative steps where a foreign producer 
either did not make a certification itself to the Attorney General or 
does not collect and maintain the requisite records, which would be an 
additional burden. Another comment vigorously opposes any suggestion 
that foreign producers must comply with any provision of section 2256 
or 2257A in order for their material to be eligible into the United 
States, and acknowledged that the Department itself recognized that any 
such suggestion could be construed as a burden on First Amendment 
rights. A third comment also notes the Department's recognition of this 
constitutional concern, stating that ``permitting a secondary producer 
to make an alternative certification [the ``reasonable steps'' 
certification under the proposed rule's Sec.  75.9(c)(5)] for such 
[foreign-produced] materials is consistent with the purpose of the Act 
and constitutional principles.'' This commenter believes that the 
alternative certification ``is a reasonable accommodation to ensure 
that American citizens are not deprived of access to a substantial 
amount of foreign material.''
    The Department of course recognizes that the ``reasonable steps'' 
certification would require a U.S. producer to take additional steps 
concerning foreign-produced material if the foreign producer neither 
has made a certification to the Attorney General nor collects and 
maintains foreign-equivalent records. For the reasons outlined above, 
however, a certification that provided no assurance or indication 
whatsoever that the performers in foreign-produced works are not minors 
could lead to the possibility that U.S. producers could inadvertently 
introduce foreign material depicting minors engaged in simulated 
sexually explicit conduct into the United States market. The Department 
believes that the alternate certification for foreign-produced material 
in the final rule, which is significantly less burdensome than that 
originally proposed (because it does not require the production of any 
list of covered material and specifies that a U.S. producer may rely on 
the representations and warranties of the foreign producer), strikes an 
appropriate balance.
    The proposed rule would not have permitted the same certification 
process for visual depictions of lascivious exhibition acquired from 
foreign entities. The Department considered that the risks of 
exploitation of children in such visual depictions and the risk of 
evasion of the record-keeping requirements would be too great to permit 
the accommodation for visual depictions of simulated sexually explicit 
conduct outlined above. The Department was further concerned that 
providing a method for weaker enforcement of section 2257 with regard 
to lascivious exhibition would undermine the existing section 2257 
requirements. The Department did note, however, that Congress clearly 
considered non-compliance with record-keeping requirements concerning 
visual depictions of simulated sexually explicit conduct (under section 
2257A) to be a less-serious crime than non-compliance with analogous 
requirements for visual depictions of actual sexually explicit conduct 
(under section 2257), as exemplified by the misdemeanor penalty for 
violation of the former section versus the felony penalty for violation 
of the latter section.
    Three comments state that the alternative certification outlined 
above concerning foreign-produced material depicting simulated sexually 
explicit conduct should also be available for foreign material 
depicting lascivious exhibition. One of these comments provided the 
following proposed text for this certification: ``I hereby certify that 
with respect to foreign primary producers who do not either collect and 
maintain the records required by sections 2257 and 2257A of title 18 of 
the U.S. Code, or certify to the Attorney General that they collect and 
maintain individually identifiable information regarding all 
performers, including minor performers, whom they employ pursuant to 
tax, labor, and other laws, labor agreements, or otherwise pursuant to 
industry standards, where such information includes the names, 
addresses, and dates of birth of the performers, in accordance with 28 
CFR part 75, [name of entity] has taken reasonable steps to confirm 
that the performers in any depictions that may potentially constitute * 
* * [simulated sexually explicit conduct] or * * * [lascivious 
exhibition] are not minors.'' This comment further notes that ``[d]ue 
to the comparably small number of foreign films at issue, the burdens 
associated with making such reasonable efforts would be minimal when 
compared with the burdens of reviewing all domestically-produced matter 
to identify scenes containing'' simulated sexually explicit conduct or 
lascivious exhibition.
    One comment explained that the Department was wrong to suggest, by 
providing an alternate certification for materials depicting simulated 
sexually explicit conduct but not for materials depicting lascivious 
exhibition, that ``posing a minor for simulated sexual conduct is 
necessarily less abusive than depicting a minor in the lascivious 
display of genitals or pubic area'' and that the Department should 
treat both kinds of material similarly to minimize constitutional 
concerns. The comment also notes that expanding the alternate 
certification to cover lascivious exhibition materials will not place 
foreign children at risk of being victimized through the production of 
child pornography because ``the

[[Page 77454]]

importation and even the mere possession of child pornography remains 
seriously criminal in all of the United States, even if all of the 
children depicted are other than U.S. nationals.'' Another comment 
states that it was inexplicable for the Department to permit an 
alternative certification for materials depicting simulated sexually 
explicit conduct but not for materials depicting lascivious exhibition.
    The Department adopts these comments. Accordingly, in the final 
rule Sec.  75.9(c)(3) (renumbered from the proposed rule's Sec.  
75.9(c)(5)) will use the text proposed by the comment above.

List of All Foreign-Acquired Matter for Which Records of Performers Are 
Not Available

    The sixth requirement in the proposed rule would have required that 
the entity making the certification include a list of the visual 
depictions or matter, including those visual depictions for which no 
records exist but for which the certifying entity had made reasonable 
efforts to ensure that no performer in any visual depiction is a minor. 
As with the case of non-employee performers, this list would have 
provided the Department with notice and a record that such visual 
depictions existed and, if necessary, would have enabled investigation 
of such matter. At the same time, the requirement of the list and a 
certification of reasonable efforts by the secondary producer in the 
United States would have provided as much protection as possible 
without unduly infringing on constitutional rights. The Department 
considered that the risk of evasion would have been mitigated by the 
severe criminal penalties for production of child pornography that 
would apply to any matter covered by the record-keeping requirements.
    As noted above, the Department is adopting comments to strike this 
provision from the final rule.

Certification of Record-Keeping by Primary Producers

    The seventh requirement in the proposed rule would have been that, 
as with foreign primary producers, an entity acquiring visual 
depictions must certify either that the primary producer in the first 
instance maintained the records required by the statute and that the 
certifying entity has copies of those records, or that the primary 
producer has certified on its own that it (the primary producer) has 
made a certification and that the entity has a copy of that 
certification.
    As noted above, the Department is adopting comments to strike this 
provision from the final rule. A key consideration in the Department's 
determination to adopt these comments is that this provision 
necessarily would have only applied to material produced in the United 
States. As the U.S. primary producers of that material would either be 
required to comply with the record-keeping provisions of sections 2257 
or 2257A or to have themselves provided with the certification to the 
Attorney General required by Sec.  75.9, it appears that the Act's 
goals would be met without requiring the secondary producers to provide 
another certification.

Application to Secondary Producers

    The Department has received many comments on the application of the 
proposed rule to secondary producers. Two comments note that the 
proposed rule applies to secondary producers as of July 3, 1995, except 
that no penalties would be imposed against secondary producers who 
failed to maintain records for acts of production that occurred prior 
to the 2006 effective date of the Adam Walsh Act. The comments argue 
that this would allow criminal prosecutions of secondary producers to 
be based on materials that were not covered at the time of their 
creation. The Department believes that application of its regulations 
to secondary producers has reflected the statutory language since 1995 
and that the Act reinforces this applicability. Nonetheless, the 
Department, recognizing that some secondary producers might not have 
believed that they were required to adhere to the requirements of part 
75, agreed in the proposed rule to apply the penalties against 
secondary producers only for depictions with dates of production after 
the 2006 effective date of the Act. However, the statutory language is 
clear that secondary producers are subject to the Act, and, therefore, 
it is not the case that any prosecution of any secondary producer for 
failure to adhere to part 75 for depictions originally produced prior 
to the Act's 2006 effective date would subject anyone to criminal 
sanctions based on materials that were not covered at the time of their 
creation.
    One comment states that the regulations should not apply to a 
secondary producer who obtained the materials before the compliance 
date without reproduction rights. According to the commenter, the 
republication rights would be worthless since it is impossible to go 
back to the primary producer to obtain those records, particularly if 
the contract at the time did not permit providing the records.
    The Department does not adopt this comment. As stated above, once 
the Adam Walsh Act took effect, all secondary producers were clearly on 
notice that part 75 applied to all depictions that were originally 
produced after the compliance date. However difficult obtaining the 
necessary records may now be, the secondary producer could have done so 
at the time in accordance with its statutory obligation. Failure to 
have done so will not excuse noncompliance. However, as elaborated more 
fully below, the Department in response to comments has changed the 
compliance date of the final rule for entities who can claim the 
exemption from part 75 obligations that is contained in section 2257A. 
Thus, although secondary producers who are governed by part 75 must 
comply with its provisions with respect to depictions of actual 
sexually explicit conduct originally produced after the Act's 
compliance date, secondary producers who can claim the exemption in 
section 2257A will not need to comply with part 75 in the interim.
    Two comments argue that secondary producers will not be able to 
comply with the terms of the proposed rule because primary producers 
have not made information available to secondary producers in all cases 
due to privacy concerns. Two other comments remark that even if the 
primary producer provides the records to the secondary producer, 
requiring the secondary producer to keep the records harms the 
performers' privacy.
    The Department does not adopt these comments. The Act applies to 
secondary producers, and, therefore, the final rule does so as well. 
Moreover, privacy concerns may not always be the reason why a primary 
producer chooses not to provide such identification records. The 
possibility exists that the primary producer declines to provide the 
records because the models are not of legal age. Congress applied 
section 2257 to secondary producers, and reaffirmed that applicability 
in the Act, so that child pornography would not be able to gain a 
market among secondary producers. Eliminating that market is critical 
to the suppression of child pornography. Given the Department's 
willingness to allow redaction of personal information to the extent 
possible to protect privacy while at the same time confirming legal 
age, it believes that there will be no unwarranted invasion of the 
performers' privacy as a result of the proposed rule.
    Four comments objected to applicability of the proposed rule to 
secondary producers on the ground that

[[Page 77455]]

secondary producers rarely come into contact with performers. These 
commenters claim that it is impossible for secondary producers to 
inspect the original identification of the performers, and that 
secondary producers cannot comply with this requirement.
    The Department declines to adopt these comments. As stated, 
Congress intended to prevent secondary producers from creating a 
commercial market for child pornography by relying on their lack of 
knowledge of the age of performers used by primary producers. The 
Department believes that it is inaccurate to state that secondary 
producers cannot comply with the proposed rule. No aspect of the rule 
is such that secondary producers will find it ``impossible'' in any 
sense to comply with them. Moreover, the legal duty that the final rule 
imposes on secondary producers relates to record-keeping only. The 
comments' claim that the secondary producer must inspect the original 
identification documents of the performers is incorrect, although 
secondary producers should take steps to ensure that they do not 
violate criminal prohibitions relating to child pornography.
    Another comment states that secondary producers cannot know whether 
the information that the primary producers possess is accurate. It 
notes that a secondary producer can be non-compliant despite taking all 
possible compliance measures. The Department agrees that both primary 
and secondary producers who keep the required records may lack full 
certainty that the information that they have is accurate. However, the 
rule does not require that producers be completely certain of accuracy. 
Primary producers must check documents and keep records based on those 
documents, with the entitlement to see driver's license or passport 
numbers to ensure that the identification validly identifies that the 
named performer is of legal age. A secondary producer is not required 
to examine documents, and if it chooses to do so, will not face 
liability simply because the documents are not accurate.
    Two comments contend that the proposed rule should not extend to 
secondary producers because concerns relating to those entities' 
document availability can be addressed by referencing the name and 
address of the primary producer's records custodian, without requiring 
a duplicate and separate set of regulatory documents by the secondary 
producer. A third comment makes a similar point, noting that such a 
reference is permitted under the current Sec.  75.2(b) of the 
regulations. The comment asks that only primary producers--not 
secondary producers--be required to personally discharge the record-
keeping requirements.
    The Department does not adopt these comments. Under the suggested 
approach, the secondary producer will not have demonstrated that he has 
actually received copies of the records from the primary producer. If 
secondary producers were exempted from an obligation to keep records, 
then the Department could never determine the identity of the primary 
producer. Failing to have the rule apply to secondary producers would 
also thwart the language of the Act that makes section 2257 applicable 
to secondary producers, increasing the chances that a commercial market 
would exist for child pornography and thus for child exploitation.
    One related comment notes that under the proposed rule and section 
2257(f)(4), each republisher must include the producer's disclosure 
statement on every republished copy. According to the comment, an 
investigator would therefore know where to find the primary producer, 
and it would be easier for an investigator to locate the primary 
producer rather than to inspect the secondary producer's records. Two 
other comments state that secondary producers should not be inspected 
because they use content provided by primary producers; they argue that 
inspection of primary producers' records would be easier than 
inspecting thousands of secondary producer sites.
    The Department declines to adopt these comments. The Act imposed a 
requirement for secondary producers to maintain records that governs 
the Department's final regulation.
    One comment posits that when original footage is created by a 
foreign primary producer, but an American secondary producer seeks to 
use the footage in news or a documentary, the foreign producer is 
beyond the reach of section 2257 and may not have any documents. The 
secondary producer in this circumstance will be unable to obtain the 
necessary records, and will have to forgo the footage or risk criminal 
penalties. According to the comment, this would result in a ban on 
certain programming, raising major First Amendment concerns.
    The Department does not adopt this comment. In such a circumstance, 
the U.S. producer would be able to rely on the certification.

General Comments

    Numerous comments address the proposed rules in general ways that 
do not require individual responses. For example, many comments argue 
that the rule is an unconstitutional burden on free speech, a violation 
of the Equal Protection Clause of the Constitution, a violation of the 
Fourth Amendment, or a violation of privacy rights. Other comments 
argue that the rule legislates morality, targets a legal industry for 
harassment, impedes citizen access to the Internet, or establishes 
government surveillance of citizens' Internet activities. Some comments 
recommend that rather than the government publishing this rule, the 
government should encourage better parenting, enforce laws prohibiting 
and punishing child pornography more vigorously, or establish an 
alternative age verification program, such as a database of all 
performers. A number of comments claim that the rule unfairly burdens 
small businesses run by women. Some comments misunderstand the scope of 
the rule to apply to consumers of pornography and therefore suggest 
that consumers be subject to age verifications procedures. Three 
comments raised the possibility that producers might experience stress 
over the fear that they might go to jail for inadvertently misfiling or 
misplacing records, another commenter is concerned that a person could 
face liability for inadvertently posting a depiction of sexually 
explicit conduct, and other commenters fear that producers are liable 
to suit for disclosing information about performers or that a Web site 
operator could be liable to suit for disclosing information about those 
who post depictions on their Web sites. Other commenters request 
exemptions for certain types of media or Web site operations that are 
not provided for in the statute. One comment recommends ending all 
record-keeping requirements prior to this rule and starting anew.
    The Department notes that these comments essentially took issue 
with the underlying statute and its requirements. The Department 
responds with three points. First, many of the comments either 
misunderstand or overstate the effect of the regulation. Second, courts 
have upheld existing section 2257 and its implementing regulation as a 
valid exercise of power by Congress and the Executive Branch, and the 
Department believes that the Adam Walsh Act and the final regulations 
are as well. Third, the Department is under a statutory obligation to 
publish the rule and cannot ignore its duty or change the statutory 
requirements through its rulemaking. To the extent these comments raise 
issues relating to the regulations themselves, the Department

[[Page 77456]]

also relies on the discussion in other parts of the supplementary 
information in support of the rule.
    Finally, the Department responds to three other comments regarding 
the regulation's applicability to non-commercial activities. One 
comment states that the definition of ``sell, distribute, redistribute, 
and re-release,'' in Sec.  75.1(d) suggests that the entire record-
keeping obligation of producers is limited to commercial production 
operations. One comment stated that age-verification requirements 
should apply only to producers who pay performers, not individuals who 
post photos of themselves, and another comment maintains that an 
exemption statement should not be required if a depiction is produced 
by married couples who produce videotaped images of themselves for 
their own personal use.
    The Department adopts these comments in part and rejects them in 
part. The statute is not clearly limited to producers who pay 
performers. However, it is limited to pornography intended for sale or 
trade. Section 2257 speaks in terms of participants in the professional 
pornography industry: The persons exhibited are ``sexual performers'' 
who must provide their ``alias, nickname, stage, or professional 
name,'' 18 U.S.C. 2257(b)(2), and the producer's relationship with the 
``performer'' is described as ``hiring, contracting for, managing and 
otherwise arranging for the depiction of'' the individual to be shown 
in the images, id. 2257(h)(2)(B)(iii). Similarly, records must be kept 
for ``every performer portrayed'' (suggesting multiple ``performers''); 
a disclosure statement is to be affixed to ``every copy'' of covered 
sexually explicit material (suggesting multiple copies); and producers 
working with images already in existence by definition produce 
materials ``intended for commercial distribution.'' Id. 2257(a), 
(e)(1), (h)(2)(A)(ii). Further, age records must be maintained at the 
producer's ``business premises'' and made available for administrative 
inspection. Id. 2257(c). Likewise, under the implementing regulations, 
age records must be cross-indexed by performer and by title of the 
explicit work, 28 CFR 75.2, and maintained ``at the producer's place of 
business,'' id. Sec.  75.4. Finally, records inspections may be carried 
out at ``any establishment of a producer,'' and ``during the producer's 
normal business hours.'' Id. Sec.  75.5. The legislative history of 
section 2257 further underscores Congress's intent to regulate images 
produced by the pornography industry: The age-verification system was 
proposed by the 1986 Pornography Commission, which described the 
recommended legislation as reaching anyone ``engaged in the sale or 
trade of sexually explicit material'' so that minors could be protected 
``through every level of the pornography industry.'' Atty Gen. Comm'n 
on Pornography, Final Report at 619 (1986).

Regulatory Procedures

Regulatory Flexibility Act--Final Regulatory Flexibility Analysis

    The Department of Justice drafted this rule in a way to minimize 
its impact on small businesses in accordance with the Regulatory 
Flexibility Act, 5 U.S.C. 601-612, while meeting its intended 
objectives. Because the Department, based on the preliminary 
information available to it through past investigations and enforcement 
actions involving the affected industry, was unable to state with 
certainty that the proposed rule, if promulgated as a final rule, would 
not have any effect on small businesses of the type described in 5 
U.S.C. 601(3), the Department prepared preliminary Regulatory 
Flexibility Analyses in accordance with 5 U.S.C. 604. Based on this 
same information, the Department concluded that there were likely to be 
a number of small businesses that are producers of sexually explicit 
conduct as defined in the statute, as amended by the Act. In the 
proposed rules, the Department specifically requested information from 
affected entities. This information was requested, in part, to assist 
us in determining the nature and extent of the impact the final rule 
will have on affected entities. Although the Department received some 
comments, the information we received was not sufficiently detailed to 
allow us to state with certainty that this rule, if promulgated, will 
not have the effect on small businesses of the type described in 5 
U.S.C. 605. Accordingly, the Department has prepared the following 
final Regulatory Flexibility Act analysis in accordance with 5 U.S.C. 
603.
A. Need for and Objectives of the Rules
    As described in detail in the ``Background'' section above, the 
objectives of the rules were to reduce the chances that minors are 
depicted in actual or simulated sexually explicit conduct by requiring 
that producers ensure that all performers are in fact of legal age, so 
as to reduce harm to children at the time of production and in 
subsequent years.
B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA
    The Department received 35 comments on its preliminary Regulatory 
Flexibility Analysis with regard to the proposed rule implementing 
revised section 2257. No commenters on the proposed rule to implement 
section 2257A commented specifically on that proposed rule's Regulatory 
Flexibility Analysis; comments as to the cost of that proposed rule are 
addressed below in the sections on the Small Business Regulatory 
Enforcement Fairness Act of 1996 and Paperwork Reduction Act.
    Many of these provided general comments about expenses that small 
businesses would incur without comparing such costs to their total 
revenues. One comment states that individual women who put depictions 
of lascivious exhibition on the Web make between $15,000 and $50,000 
and do not have the money to buy office space. Three comments noted 
that producers who work from home will have to rent office space if 
they want to keep their home address private, or they will be required 
to pay for day care. One comment states that the proposed rule would 
create significant bureaucratic challenges to content producers by 
implementing a requirement to provide production-date information in 
more locations.
    The significant issues raised by the public comments in response to 
the initial regulatory flexibility analysis are as follows: One comment 
estimated that costs of compliance for an ``adult business'' would be 
$250,000, about 25% of the business' net revenues.
    For example, one comment remarked that his business would need to 
hire three full-time staff to manage and collect information concerning 
205,000 profile holders on a personal posting Web site and compile the 
required age documents. The comment estimated that the cost of the 
three base salaries would be $150,000 per year, which exceeded the 
business' current revenue, and that his home (office space) lacked room 
for three additional staff. The comment also notes that it could not 
pass these costs on because the business did not charge a membership 
fee, and that making copies of records on 205,000 users would mean that 
it would have to purchase 136 three-drawer filing cabinets. It contends 
that the space required for this many cabinets would mean that it would 
have to rent external storage units for $67,200 per year, that the cost 
of the filing cabinets would be $68,000, and that the total compliance 
cost for the business would be $345,800.

[[Page 77457]]

Three comments made similar comments concerning types of expenses 
without specifying amounts.
    Six comments claim that compliance costs for collecting records, 
documentation, updating, cross-referencing, and legal services would be 
high. One comment states that small businesses would incur excessive 
legal costs because of the ``draconian sanctions'' for failure to 
comply with the substantive or procedural requirements of the statute 
and regulations. One comment claims that the costs of compliance would 
present a large obstacle to expanding a business. Three comments state 
generally that the proposed rule would harm small business. Two 
comments point out that small businesses would need to separate these 
records from others, which would be costly, and that they would incur 
vastly increased storage costs due to the necessity of maintaining 
records for every photograph of every performer. Two comments contend 
that the proposed rule would place an unreasonable burden on many law-
abiding businesses. One comment claims that the vast majority of Web 
sites are small entities, and that listing their owner's street (often 
home) address and individual name is a substantial burden and creates a 
chilling effect on constitutionally protected expression. One comment 
states that secondary producers are often small businesses that could 
not afford the time or expense to obtain and maintain copies of records 
that are best created and maintained by the primary producer that does 
see the original documents. Two commenters represented that some 
secondary producers will go out of business due to the proposed rule's 
requirements. One comment states that it would lose revenue from 
international profile holders because he will not be able to obtain 
required United States documents from foreigners who post self-nudes on 
the commenter's profile Web site. Two commenters from small businesses 
claimed that they could never generate the money necessary to pay for 
the increased expenses associated with the proposed rule.
    One comment states that the Department would greatly reduce 
compliance costs if section 2257 producers could take advantage of the 
2257A process under 2257A(h)(1)(A)(ii). The comment states that this 
would eliminate the need to produce and maintain segregated records. 
Doing so, the comment states, would give these producers the same 
compliance option as producers who are identical in every permissible 
relevant respect. One comment argues that the Department is required 
under 5 U.S.C. 605(b) to conduct analyses to ensure that the regulation 
will not have a ``significant impact on a number of small entities.'' 
The comment states that analyses are required unless the agency can 
make a ``no significant impact'' certification. One comment argues that 
the Department failed to conduct or write a proper initial regulatory 
flexibility analysis.
    These comments are not all specifically addressed to the proposed 
rule's initial regulatory flexibility analysis, but the content of the 
comments raise issues that are in substance addressed to the analysis, 
and are therefore discussed in the final regulatory flexibility 
analysis. The Department offers the following as a summary of its 
assessment of the issues that were raised.
    The Department believes that there is merit in those comments that 
raised cost impact and logistical concerns relating to individuals who 
produce actual sexually explicit depictions on Web sites at their 
homes. The Department has made changes to the proposed rule as a result 
of these comments. The Department believes that the final rule relieves 
three restrictions that will largely respond to the generalized 
comments that the Department received concerning the cost impact of the 
proposed rule on small businesses. First, the final rule does not 
require the keeping of hard copies, only that such copies be produced 
on the demand of inspectors. This relief of a restriction will reduce 
costs of storage, personnel, and related expenses that were noted in 
the comments. The combined effect of these reliefs of restrictions will 
greatly reduce the impact of the rule on law-abiding businesses, on 
expanding businesses, and on the profitability of businesses. Second, 
the final rule, in a change from the proposed rule, allows hyperlinks 
to appear on each Web page, rather than require that the full 
disclosure statement appear on each such Web page. This relief of a 
restriction will reduce the cost of providing information concerning 
the original production date in more locations, as one comment raised. 
Third, the final rule permits the producer not to retain records 
onsite. Rather, the required records can be retained by third-party 
custodians. This change, although imposing a cost of custodian services 
by those entities that choose to take advantage of it, will greatly 
reduce compliance costs in the categories of storage, rental space, and 
record-keeping including segregation of records, legal, and staff 
salaries. Additionally, this change will relieve other burdens on small 
businesses enunciated by the comments, such as release of home address 
information. Finally, small businesses that can fall within the safe 
harbors contained in section 2257A will be relieved of record-keeping 
and disclosure-statement requirements altogether as outlined above.
    In addition to the reduction in burden on small businesses 
associated with substantive changes to the proposed rule, the 
Department notes the importance of the change in the compliance date of 
the final rule in alleviating burdens on small businesses. Originally, 
the record-keeping obligations that the rule imposes on small 
businesses were to relate to all works produced after the effective 
date of the statute in 2006. But the Department has changed the final 
rule's compliance date to the compliance date of the final rules that 
will be issued to implement section 2257A. The Department believes that 
the two statutes are interrelated because section 2257A contemplates 
that some entities, including some small businesses, are to be able to 
comply with its terms, and that by doing so, they would not have to 
comply with the regulations issued under the Act. Because the final 
rule's record-keeping requirements will never apply even for a single 
day to small businesses that comply with the section 2257A 
certification process, the record-keeping cost burden on such small 
businesses is completely eliminated. Moreover, even those small 
businesses that will eventually need to comply with the final rule 
because their conduct does not permit them to use the section 2257A 
certification exemption will not have to expend resources complying 
with the final rule for the years that have lapsed since the proposed 
rule's compliance date.
    Two of the commenters were Internet sites on which users can post 
profiles who claim that the rule would adversely affect their business 
operations. The Department does not believe that these comments 
reflected the effect of either the proposed rule or the final rule on 
their businesses. A profile site is not normally a producer. The 
individuals who post depictions of lascivious exhibition on those sites 
are producers. It is the latter, not the former, assuming that the Web 
site does not act as a producer, who are required to comply with the 
record-keeping and disclosure statements. Furthermore, this final rule 
does not impose as large an impact on small business as some commenters 
understood from the proposed rule.

[[Page 77458]]

    The Department responds to the comment that recommends that small 
businesses receive the opportunity to comply with the statutory safe 
harbor by stating that the exemption referred to in the comment is 
available to any producer who can meet its conditions. The Department's 
ability to apply an exemption is limited by the statutory language. 
However, the Department has recognized the exception that is created in 
section 2257A(h)(1)(A)(ii), and in its final rule, the Department has 
stated that it will ensure that the applicability of that safe harbor 
will operate despite the fact that no regulation implementing it has 
been promulgated. As stated above, the Department has set the 
compliance date for the final rule so as to allow entities who are 
compliant with section 2257A(h)(1)(A)(ii) not to comply with the final 
rule or incur the costs of doing so, even as an interim measure. 
Moreover, the Department notes that applicability of the exemption does 
not turn on whether the entity seeking to comply with the safe harbor 
is a large or small business. The exemption turns on the conduct of the 
entity that seeks to utilize it, not the status of the entity itself.
    With respect to the procedural requirements for a regulatory 
flexibility analysis, the Department believes that this final 
regulatory flexibility analysis fully satisfies 5 U.S.C. 604.
    As in its initial regulatory flexibility analysis, the Department 
continues to believe that approximately 500,000 Web sites involving 
5,000 businesses that depict actual sexually explicit conduct are 
affected by the rule. As a result of being subject to the final rule, 
these businesses will be required to check identification documents, 
record information about production dates and age and names of 
performers, and affix disclosure statements to each copy of a page that 
depicts actual sexually explicit conduct. These businesses are in the 
film, magazine, Internet, satellite, mail order, magazine, content 
aggregation, and wholesaler industries. Although one commenter claims 
that there are more affected businesses based on considerable exposure 
to the industry, the comment provides no specific basis for that 
belief, nor did it offer any competing number or evidence for such a 
number. One other commenter notes that there are about 1,000 firms that 
operate more than 100,000 adult subscription Web sites. This statement 
does not affect the validity of the Department's estimates of the 
number of Web sites and firms that the rule would affect. The 
Department's estimate did not estimate the number of subscription sites 
or the number of firms that operate them. The commenter's estimate of a 
portion of the relevant site universe is fully consistent with the 
Department's estimate of the entire number of affected Web sites. No 
other commenters specifically took issue with the Department's 
estimate, which it continues to adhere to.
    The final rule requires small businesses and other entities that 
produce actual sexually explicit materials to undertake record-keeping 
and other compliance requirements. They must check particular forms of 
identification to determine that all performers portrayed in such 
depictions are of legal age, they must keep records, they must 
segregate the records, and they must place disclosure statements on 
each page of a Web site that contains actual sexually explicit conduct. 
The professional skills required to comply are those necessary to 
produce the records and to place the disclosure statement on a 
hyperlink on each page of a Web site.
C. Description and Estimates of the Number of Small Entities Affected 
by the Rules
    A ``small business'' is defined by the Regulatory Flexibility Act 
(``RFA'') to be the same as a ``small business concern'' under the 
Small Business Act (``SBA''), 15 U.S.C. 632. Under the SBA, a small 
business concern is one that: (1) Is independently owned and operated; 
(2) is not dominant in its field of operation; and (3) meets any 
additional criteria established by the SBA. See 5 U.S.C. 601(3) 
(incorporating by reference the definition of ``small business 
concern'' in 15 U.S.C. 632). As in its initial regulatory flexibility 
analysis, the Department continues to believe that approximately 
500,000 Web sites involving 5,000 businesses that depict actual 
sexually explicit conduct are affected by the rule. The Department 
believes that of these 5,000 businesses, 4,000 are small businesses. It 
reaches this conclusion from comments that stated that the vast 
majority of businesses affected by the final rule are small businesses.
    In the proposed rule to implement revisions to section 2257, the 
Department stated that, based upon the information provided to the 
Department through past investigations and enforcement actions 
involving the affected industry, there are likely to be a number of 
small businesses that are producers of visual depictions of sexually 
explicit conduct as defined in the statute, as amended by the Adam 
Walsh Act. In the proposed rule to implement section 2257A, the 
Department stated that based upon the information available to the 
Department, there are likely to be a significant number of small 
businesses that are producers of visual depictions of simulated 
sexually explicit conduct.
    Pursuant to the RFA, the Department requested affected small 
businesses to estimate what these regulations will cost as a percentage 
of their total revenues in order to enable the Department to ensure 
that small businesses are not unduly burdened.
    The Department also stated that the proposed rules had no effect on 
State or local governmental agencies.
D. Description of the Proposed Reporting, Record-Keeping and Other 
Compliance Requirements of the Rule
    In the proposed rule to implement revisions to section 2257, the 
Department stated that the proposed rule modified existing requirements 
for private companies with regard to visual depictions of sexually 
explicit conduct to ensure that minors are not used in such depictions. 
One of these requirements that would specifically affect private 
companies is Congress's expansion of the coverage of the definition of 
``sexually explicit conduct'' to cover lascivious exhibition of the 
genitals.
    In the proposed rule to implement section 2257A, the Department 
stated that the proposed rule imposed requirements on private companies 
with respect to visual depictions of simulated sexually explicit 
conduct to ensure that minors are not used in such depictions. 
Specifically, the Department noted, the rule imposed certain name- and 
age-verification and record-keeping requirements on producers of visual 
depictions of simulated sexually explicit conduct concerning the 
performers portrayed in those depictions. The Department also noted 
that the proposed rule, however, provided an exemption from these 
requirements applicable in certain circumstances.
    The costs of the rule to small entities are less than the 
Department originally anticipated. Thus, the conclusions of the cost 
estimate that was submitted to the Department by Georgetown Economic 
Services reflect assumptions that no longer apply. For instance, that 
report estimated average small business monthly compliance costs of 
$5,000, plus up-front conversion costs and time to ensure initial 
compliance. The report contends that most small businesses in the 
pornography industry generate insufficient revenue to cover this level 
of regulatory cost imposition. However, because the Department has 
listened to the comments that it has received, and

[[Page 77459]]

believes that its objectives can be accomplished while at the same time 
implementing regulatory changes resulting in imposing a lighter burden 
on regulated industry, it does not believe that the report's 
conclusion, if it ever was correct, applies to the final rule.
    For instance, the report assumes in its high cost estimate figures 
related to formatting section 2257 records and leasing storage space. 
However, the final rule changed the requirements that imposed these 
costs so as to dramatically reduce them. For instance, far less storage 
space is needed now that the final rule, in response to comments, has 
eliminated the hard-copy requirement. It was the proposed rule's hard-
copy requirement that had generated the need for significant storage 
space. Similarly, the cost of legal fees will be significantly less 
than anticipated. The report estimated that the proposed rule would 
require affected businesses to hire at least one full-time employee to 
maintain the database at a cost of $20 per hour. Since the final rule, 
responding to various comments concerning the need to hire employees 
and the difficulties that this requirement posed for part-time 
operators and for operations that were run out of the home, has 
permitted records to be stored in offsite, third-party locations, 
businesses will not need to incur the cost of hiring full-time 
individuals to maintain only their own records. And it bears repeating 
that the cost estimate's figures for online dating sites misapprehend 
the nature of both the proposed and final rules. The operator of such a 
site incurs no obligations under either rule if it simply operates as a 
location where users post lascivious exhibitions; it is the individual 
producer who posts such material on the Web site who must comply with 
the regulatory provisions.
E. Description of the Steps Agency Has Taken To Minimize the 
Significant Adverse Economic Impact on Small Entities
    The Department took numerous steps to minimize the economic impact 
on small entities consistent with the objectives of the Act. As noted 
above, precisely to minimize the concerns of commenters that 
significant compliance costs would be incurred by small businesses if 
the proposed rule were promulgated without change as a final rule, the 
Department adopted three significant substantive changes to that 
proposed rule: (1) Elimination of a ``hard copy'' requirement for 
record-keeping; (2) allowing third parties to be custodians of the 
records; and (3) allowing the disclosure statement to appear as a 
hyperlink, rather than in full, on each page. The Department also 
changed the compliance date. These changes will reduce staffing 
requirements, the need to rent or purchase filing cabinets, the cost of 
modifying existing images, and other small business compliance costs 
that commenters have raised. Although some of the general comments that 
the Department received were rejected based on policy concerns, few of 
the comments submitted on the economic impact of the rule on small 
business were rejected for policy reasons. Such comments were either 
adopted to reduce the restrictions on small businesses where the Act 
permitted or, in almost all circumstances, were rejected because the 
Act did not legally permit the Department to adopt them.
    Section 2257(a) requires that whoever produces matter that contains 
actual sexually explicit conduct ``create and maintain individually 
identifiable records pertaining to every performer portrayed in such a 
visual depiction.'' This requirement prevents the Department from 
modifying the proposed rule to exempt secondary producers or small 
businesses as a class. Moreover, each person with this obligation must 
ascertain by examining identification documents the name and date of 
birth of each performer who is visually depicted in sexually explicit 
conduct. And each must also ascertain other names of the performer. 
Subsection (c) requires that the records be maintained under the terms 
of regulations promulgated by the Attorney General and that they be 
made available at all reasonable times for inspection. These provisions 
impose burdens on small and other businesses that are not reducible to 
insignificance. Similarly, subsection (e) requires that all covered 
entities affix to every copy of sexually explicit material a statement 
indicating where the mandated records are kept. Those records are to 
conform to standards issued by the Attorney General. And section 
2257A(h) contains a specific safe harbor certification process that 
allows some entities to avoid compliance with these requirements.
    The Department, however, may not expand the category of entities 
that fall within that subsection's parameters beyond those who meet the 
statutory conditions. Nor may the Department exempt secondary producers 
from record-keeping and other compliance requirements that the Act 
mandates. Therefore, the Department accepted alternatives to the 
proposed rule that effectuated the statutory objectives while reducing 
the compliance burdens of small businesses, but rejected those 
alternatives that were inconsistent with the statute and its purposes.
    One proposed reduction in compliance costs for small businesses 
that was rejected on policy grounds was the request to end the 
segregation-of-records requirement for section 2257 records. Because 
the Attorney General must inspect these records, the Department 
believes that a lesser imposition will occur on those subject to 
inspection if the requisite records are kept separately. The Attorney 
General will not then need to review all of a producer's records in 
search of section 2257 records, nor will the small business need to 
disrupt its business for the length of time for all of its records to 
be inspected. Therefore, the Department believes that its position on 
this point will not impose substantial cost on small business. Further, 
it believes that it has drafted the final rule to take into account the 
legitimate cost concerns of small businesses to the proposed rule 
wherever possible. The Department is unaware of any other federal rules 
that may duplicate or conflict with the proposed rule, and no commenter 
has brought any such rule to its attention.

Executive Order 12866

    This final rule has been drafted and reviewed in accordance with 
section 1(b) of Executive Order 12866 (Principles of Regulation). The 
Department has determined that this rule is a ``significant regulatory 
action'' under section 3(f) of Executive Order 12866. Accordingly this 
rule has been reviewed by the Office of Management and Budget.
    The benefit of the rule is that children will be better protected 
from exploitation in the production of visual depiction of sexually 
explicit conduct by ensuring that only those who are at least 18 years 
of age perform in such depictions. The costs to the industry include 
slightly higher record-keeping costs.

Executive Order 13132

    This rule will not have substantial direct effects on the States, 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government. Therefore, in accordance with Executive Order 
13132, it is determined that this rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment.

[[Page 77460]]

Executive Order 12988

    This rule meets the applicable standards set forth in sections 3(a) 
and 3(b)(2) of Executive Order 12988.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more, in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995, 2 U.S.C. 1501 et seq.

Small Business Regulatory Enforcement Fairness Act of 1996

Proposed Rule on Revisions to Section 2257
    At the time of the proposed rule the Department stated that the 
proposed rule was not a major rule as defined by section 251 of the 
Small Business Regulatory Enforcement Fairness Act of 1996, codified at 
5 U.S.C. 804. 72 FR at 38037. The Department determined that the 
proposed rule would not result in an annual effect on the economy of 
$100,000,000 or more; a major increase in costs or prices; or 
significant adverse effects on competition, employment, investment, 
productivity, innovation, or the ability of United States-based 
companies to compete with foreign-based companies in domestic and 
export markets.
    One comment disputes the Department's view that the proposed rule 
would not cost the economy more than $100,000,000. According to this 
comment, software support and legal advice costs ``will be substantial 
and probably incalculable.'' It claims that secondary producers will 
need to employ a records custodian at least 20 hour per week and that 
doing so for the 5,000 businesses that the Department estimates will be 
affected would cost $30,000 each, for a total cost of more than 
$100,000,000. One comment cited a poll of businesses asking them what 
they expected the cost of compliance with the proposed rule would be 
and determined an average cost of more than $210,000 per business. The 
comment asks that the proposed rule be reviewed and promulgated in 
accordance with requirements pertaining to rules that impose a greater 
than $100,000,000 impact on the economy. The Department received a 
comment containing a long technical cost estimate that had been 
prepared by an entity other than the commenter that posited that 
compliance costs associated with the proposed rule would be 
significant.
    The Department does not adopt these comments. First, as outlining 
the substance of the comments in the notice demonstrates, not all 
commenters have accurately understood the proposed rule. In each 
instance, those commenters overstate the burden of the proposed rule 
upon them. That overstatement would necessarily cause such entities who 
participated in a poll to overestimate the compliance costs they would 
incur as a result of the rule. Second, the comments on the proposed 
rule by affected entities were entirely unfavorable. These entities 
would have every reason to overstate their compliance costs, and there 
is reason to believe that this has occurred. The Department questions 
the salary estimates that were offered for hiring staff to keep 
records, for instance. Similarly, one commenter states that compliance 
costs per small business would amount to $30,000 and another that the 
cost would be more than $200,000. This chasm in the estimates raises 
serious questions concerning the accuracy of the estimates and the 
methodology that produced them.
    Moreover, whatever validity these estimates may have had with 
respect to the proposed rule, the decreased compliance costs due to 
removing restrictions as contained in the final rule reduces the 
accuracy of the submitted estimates significantly. Although a business 
that produces depictions of lascivious exhibition will be required to 
keep records, because such a business could use a third-party custodian 
that would benefit from economies of scale, because hard copies would 
not have to be kept, and because the disclosure statement requirements 
have been significantly eased, such a business would avoid significant 
amounts of compliance costs for such categories as legal, storage, and 
staffing costs. There is no reason to believe that the final rule would 
impose $100,000,000 in costs on the economy. Many of the entities 
covered by this final rule already produce actual sexually explicit 
conduct as defined under the narrower existing rule, which imposes 
greater costs on such entities than those associated with this final 
rule; hence, they will face only negligible additional costs.
    Because the cost estimates are based on assumptions regarding the 
proposed rule that were changed for the final rule, its conclusions 
that ``most web-based businesses will exit from the industry'' and that 
other types of businesses ``will either shut down or move their 
businesses to another country'' are not valid. The Department has 
adopted the legitimate concerns of legitimate pornographic small 
businesses, and has changed the final rule in ways that significantly 
reduce the costs of the regulations on operations, and that will result 
in few if any business failures on the part of entities that wish to 
comply with the laws against producing child pornography.
    In addition, the Department believes that the best estimate of cost 
of compliance per affected small business is in actuality far less than 
what commenters have submitted. The Department is aware of the 
existence of businesses that provide section 2257 services to regulated 
entities to ensure satisfaction of the requirements of the 2005 final 
rule, and it therefore fully expects that such entrepreneurial activity 
will also provide compliance services with respect to this final rule. 
Various Web sites provide model releases, software, technical support, 
installation, assistance with data, and additional hardware such as 
scanners. For example, one service provides tracking of content, 
performers, identification, and other section 2257 compliance 
information for a cost of $8,000 to the producer. Another Web site 
offers similar services with respect to performer data collection, 
creation of digitized images, indexing, cross-referencing, record-
creation, offsite maintenance of records, release documents, reports, 
correction of record discrepancies, generation of documents for vendors 
and distributors, storage of scanned releases and compliance 
statements, and storage of names and aliases, for an initial cost of 
$1,500 plus $60 per month for online record access and stored performer 
records.
    The Department also expects that since the final rule allows third 
parties to hold records of small businesses, even apart from the 
services now being offered, some of which include offsite record 
maintenance, a third-party custodian industry will exist to support 
regulated small businesses at reasonable costs, should a small business 
wish to outsource only those elements of its compliance costs with the 
final rule.
    One comment states that many of the entities regulated by the final 
rule would be considered small businesses, in that their revenue would 
be less than $27,000,000, or if secondary producers, $23,000,000, or 
$13,500,000, or $6,500,000, depending on their respective operations; 
however, the comment provided no average revenue per small business. In 
any event, averages in the context of the rule could diverge widely 
from medians. Suffice it to say, given that the comment states that the 
adult pornography business generates $12 billion in revenues, even

[[Page 77461]]

a small business with revenues considerably less than the smallest 
category of small business--$6,500,000--would not find to be overly 
burdensome compliance costs ranging from (at the low end) $1,500 plus 
$60 per month to (at the high end) $8000.
    One comment argues that SBREFA requires agencies to consider 
alternatives that fit federal regulatory initiatives to the scope and 
scale of small entities. It states that agencies must consider the 
regulatory impact of their rules on small businesses, and analyze 
alternatives that minimize effects on small businesses. The Department 
adopts this comment, and as noted elsewhere in this notice, has made 
multiple changes to the proposed rule that demonstrate consideration of 
alternatives that would reduce the impact of the rule on small 
businesses, and has adopted several proposals that commenters have 
asked the Department to accept where the statutory language permitted 
it to do so.
    One comment characterizes the compliance costs of the proposed rule 
as burdensome with respect to staffing, software development, updating 
and maintenance, and institution of new compliance procedures. The 
Department has addressed this comment in part by adopting the cost-
saving measures described earlier in this preamble: reducing the 
staffing and computer burdens of the final rule by allowing third-party 
custodians to keep records, by eliminating the hard copy requirement of 
the proposed rule, and by permitting the disclosure statement to appear 
on each page by hyperlink text.
    Five comments state that the proposed rule would force small 
companies to shut down. These five comments also maintained that 
surviving firms would face a much harder time in continuing operations. 
Yet another comment posited that the remaining firms would produce less 
output as a result of the proposed rule. One comment raised concerns 
that affiliate sites that contain photographs will not be able to 
survive the cost of formatting records, maintaining a database, and 
leasing space, and may go out of business as a result. One other 
comment related that dating sites that displayed about 8,000,000 
profiles with graphic content would need to make photo records at 3 
minutes per record, with a staffer paid $20 per hour to create a 
picture for every file. That comment cited a National Research Council 
report that compliance with the regulations would be likely to increase 
expenses and drive out some of the small enterprises.
    The Department does not adopt these comments. First, as stated 
above, the Department does not believe that the final rule will cause 
the outcomes that the comments predicted, since the final rule takes 
into account so many of the concerns of small businesses. Also, as 
stated above, businesses such as dating services that in fact do not 
produce depictions of sexually explicit conduct, are not the entities 
that are responsible for record-keeping and disclosure statements. 
Those responsibilities in those circumstances would fall upon the 
individuals who post graphic content on the site. To the extent that 
the final regulation does impose costs on small businesses that could 
affect their operations, the Department believes that these costs are 
the irreducible minimum costs that Congress imposed in the Act as a 
consequence of increasing the likelihood that underage depictions would 
not be produced or that demand for and distribution of such depictions 
would not be increased because of the existence of secondary producers 
who wittingly or unwittingly made them available.
    In addition, the Department does not believe that the National 
Research Council's 2002 report, Youth, Pornography, and the Internet, 
quoted by one commenter, provides support for the commenter's position. 
First, the report is now six years old and was issued before the 
current regulations were published. Second, the report did not quantify 
the purported effect of regulations on small businesses that would 
occur as a result of even the prior rules, much less this rule. 
Moreover, at page 213, the report notes that ``[m]ore active 
enforcement'' of the record-keeping requirements ``may better protect 
minors from participation in the creation of child pornography.'' To 
the extent that the comment relies on the report to claim that the 
effect of the rule might be to drive some small operators out of 
business, the Department agrees, but that report makes that statement 
only with respect to businesses who do not comply with their statutory 
obligations.
    Many comments pertained to the proposed rule's effect on social 
networking sites. These comments claim that the proposed rule would 
harm adult social networking sites because of record-keeping 
requirements on users, a decline in the number of users, and their 
unwillingness to provide the required information because of fear of 
discrimination, because their names would be posted. Additionally, they 
state that the effect of the proposed rule could be the elimination of 
the social networking site industry, which the comments described as a 
legal and valuable way for adults to meet one another.
    The Department does not adopt these comments. Although the rule 
would require users who chose to display actual sexually explicit 
conduct on adult social networking sites to keep records, the rule is 
inapplicable to social network site operators. The rule cannot exempt 
users from the record-keeping requirements the Act imposes. The 
Department has minimized these effects by reducing the costs of 
compliance. Moreover, it has eliminated any concerns, whether or not 
justified, that such users would face discrimination by allowing third-
party custodians to maintain the records. The user's disclosure 
statement that is required to appear on the Web site would therefore 
not need to identify any name or address of the user, but merely the 
location of the third party that holds the records.
    Two comments claim that secondary producers' income would decline 
as a result of having to comply with the rule. According to these 
commenters, out of fear of relying on primary producers' records, 
rather than reproducing depictions provided by primary producers, they 
would instead use text links to primary producers' sites. The 
Department does not adopt these comments. As a result of the final 
rule, secondary producers can trust that primary producers complied 
with section 2257 and did not employ underage performers.
    Four comments state that the proposed rule would not affect foreign 
Web masters, and the federal government would have to spend funds to 
determine which businesses were or were not foreign. These comments 
also contend that harm to domestic business would occur vis-a-vis 
foreign businesses as perhaps more production would occur offshore, 
which would circumvent the safeguards. One comment claims that the rule 
would worsen the balance of payments because Americans will have to 
obtain their pornography from foreign sources. One comment states that 
the regulation would create an unfair trade barrier (against the United 
States) because offshore personal page Web sites will be more 
attractive for American citizens who wish to self-post nude content, 
and all users will shift their profiles to offshore sites.
    The Department does not adopt these comments. The rule can apply 
only to circumstances to which the Act applies. Congress has limited 
authority to apply American criminal prohibitions against entities that 
operate only in foreign

[[Page 77462]]

countries, and the Department can only issue regulations implementing 
those prohibitions that have the same reach. To the extent that 
production of depictions of actual sexually explicit conduct shifts 
offshore as a result of record-keeping requirements generally, that is 
the unavoidable effect of the Act. The Department has minimized burdens 
on small business to minimize the effect of the rule on the situation 
these comments raise. To the extent that the rule reduces production of 
child pornography in the United States, that is the desired goal of 
both the Act and the rule. With respect to balance of payments, 
Americans who seek pornography will have access to numerous domestic 
sources of pornography under the rule, even if some production moved 
offshore. The comment makes no showing that the rule will cause the 
price of access to domestic pornography to rise compared to foreign 
pornography to a level that would lead pornography-seeking Americans to 
shift their purchases from domestic to imported product.
    One commenter notes that the EU Privacy Directive means that some 
primary producers will only obtain affidavits that relate to people 
under 18 and that state where the records are located. Therefore, 
American businesses could not obtain needed records, while foreign 
competitors do not need to worry about the need to comply or experience 
compliance costs.
    The Department does not adopt this comment. The Act requires that 
records exceeding those allowed in the EU Privacy Directive be kept. 
Foreign competitors will operate under different rules to the extent of 
U.S. and EU authority. The Department is unable to change that fact.
Proposed Rule To Implement Section 2257A
    As stated in the proposed rule, the Department is unable to 
estimate with any precision the number of entities producing visual 
depictions of simulated sexually explicit conduct. Because the issue of 
the number of entities producing visual depictions of simulated 
sexually explicit conduct is a new issue that has arisen precisely 
because of the enactment of section 2257A, there does not appear to be 
much available information concerning the number of entities producing 
such material. As a partial indication, according to the U.S. Census 
Bureau, in 2002 there were 11,163 establishments engaged in motion 
picture and video production in the United States. Based on a rough 
estimation that 10% were engaged in the production of visual depictions 
of simulated sexually explicit conduct, the Department estimated that 
approximately 1,116 motion picture and video producing establishments 
would be covered. The underlying statute provides an exemption from 
these requirements applicable in certain circumstances, and it requires 
producers to submit certifications to qualify for this exemption. The 
Department has no information concerning the number of otherwise 
covered entities that would qualify for this statutory exemption, nor 
is it able to estimate this number. For entities that qualify for the 
statutory exemption, however, the Department estimated that it would 
take less than 20 hours per year, at an estimated cost of less than 
$25.00 per hour, to prepare the biennial certification required for the 
statutory exemption. The Department's burden-hour estimate for 
preparing the biennial certification required for the statutory 
exemption was based on the proposed rule's requirements for such 
certification, which have been drastically curtailed and simplified in 
the final rule. The proposed rule would have required that the 
certification take the form of a letter indicating that the producer 
regularly and in the normal course of business collects and maintains 
individually identifiable information regarding all performers employed 
by that person, and would have required a list of the titles, names, or 
other identifying information of visual depictions of simulated 
sexually explicit conduct or lascivious exhibition produced since the 
last certification, as well as a list of the titles, names, or other 
identifying information of visual depictions of simulated sexually 
explicit conduct or lascivious exhibition that include non-employee 
performers. The Department assumed that the certification's main burden 
would have been to require producers to maintain a list of the visual 
depictions produced during the certification period, and that the 
majority of the work to prepare the certification would be performed by 
administrative staff. The Department further estimated that 90% of such 
entities would qualify for the exemption.
    The Department received three comments contesting the Department's 
estimates for preparing the certification contemplated by the proposed 
rule. One comment states that the Department's estimation that 
preparing the certification would require less than 20 hours a year of 
administrative staff time at a cost of less than $25 per hour ``grossly 
understates the burden at issue'' because the determination as to 
whether given depictions constituted lascivious exhibition or simulated 
sexually explicit conduct, a prerequisite to preparing the lists 
contemplated by the proposed rule, would require attorneys to review 
the depictions at a cost far higher than $25 per hour, and thousands of 
hours of material would have to be reviewed. The comment thus concludes 
that ``the regulations impose not a trivial burden, but a very 
substantial one that will surely chill legitimate expression by 
producers anxious to avoid criminal sanctions.''
    The second comment states flatly that the Department's estimate 
that the certification contemplated by the proposed rule would require 
less than 20 hours per year to prepare, at an estimated cost of less 
than $25 per hour ``has no basis in reality'' because some producers 
will have hundreds or even thousands of depictions, and also because 
the producers will have certain obligations with respect to foreign-
produced materials such as seeking to determine if foreign producers 
comply with the requirements of United States law or taking reasonable 
steps to assure that foreign materials do not depict minors in 
depictions of lascivious exhibition or simulated sexually explicit 
conduct. This comment also explains that the determination as to 
whether depictions constitute lascivious exhibition or simulated 
sexually explicit conduct will have to made with the assistance of 
counsel, which will entail increased costs.
    The third comment bluntly states that the Department's 
``assumptions regarding the time and cost of compliance with the 
proposed [certification] regime * * * are unsupported and fallacious.'' 
The comment states that Department's citation to the 11,163 producers 
in 2002, above, ``represented only `primary producers' '' and that 
``there have long been many, many times that many websites featuring 
sexually explicit materials operating from the United States.'' This 
comment also states that the Department's estimation that 10% of the 
11,163 producers ``disseminate simulated sexually explicit materials or 
material with lascivious exhibition * * * cannot be justified and seems 
unrealistic to us.'' Moreover, the comment states that ``since domestic 
`secondary producers' are substantially dependent upon foreign primary 
producers, limiting the number of producers to those counted by the 
Census Bureau excludes thousands more primary producers'' and 
``including `secondary producers' '' into the Department's numbers 
multiplies the scope by magnitudes.'' The

[[Page 77463]]

comment concludes that ``[a]ssuming a more realistic number of several 
million adult websites, even keeping the unjustified and unjustifiable 
ten percent [that produce depictions of lascivious exhibition or 
simulated sexually explicit conduct], the Department has undercounted 
the number of entities affected by a factor of one hundred or more'' 
and that ``rather than the 1100 producers claimed by the Department, 
there are likely several hundred thousand.''
    The Department recognizes the difficulty of estimating the burden 
of preparing the certification contemplated by the proposed rule and 
the difficulty of estimating the number of producers of depictions of 
lascivious exhibition and simulated sexually explicit conduct. 
Accordingly, the Department appreciates the comments that responded to 
the Department's request for input on these issues.
    With respect to the burden of preparing the certification required 
by the final rule, the Department believes that it would be minimal 
compared to the burden of preparing the certification contemplated by 
the proposed rule. The certification in the final rule does not require 
producers to identify which of their materials constitute depictions of 
lascivious exhibition or simulated sexually explicit conduct, nor does 
it require producers to keep records concerning the depictions produced 
that include non-employee performers, the depictions produced since the 
last certification, the foreign-produced depictions that the certifier 
took reasonable steps to confirm did not depict minors, or a 
certification that a primary producer either collects and maintains the 
records required by sections 2257 and 2257A or has itself made the 
requisite certification to the Attorney General. The final rule now 
only requires that the producer state the basis under which it 
qualifies for the certification regime, using the brief certification 
statement contained in Sec.  75.9(c)(2) of the final rule. For foreign-
produced materials, a producer would use either the certification or 
alternate certification contained in Sec.  75.9(c)(3) of the final 
rule. The Department thus believes that the certification would impose 
a far smaller burden than that contemplated by the proposed rule.
    In cases other than those involving foreign-produced material, for 
which the alternate certification is necessary, the Department 
estimates the certification would require less than two hours to 
complete. A further reduction in the burden as compared to the 
certification contemplated by the proposed rule is that the final rule 
only requires that the certification be submitted once and amended only 
as needed, rather than requiring that a certification be submitted 
every two years. Estimating that the certification is prepared by an 
administrative staffer at a cost of $25 per hour, the certification 
should cost a producer no more than $50.
    In cases involving foreign-produced material where the alternate 
certification contained in Sec.  75.9(c)(3) of the final rule is 
necessary, a producer would have to take ``reasonable steps to 
confirm'' that depictions do not depict minors. The certification in 
the final rule would impose a reduced burden in this circumstance as 
well, as the final rule clarifies that such ``reasonable steps'' can 
include simply reviewing the depictions or relying on a representation 
or warranty made by the foreign producer of these materials. In cases 
where the foreign producer makes such a representation or warranty, the 
Department estimates little or no additional cost in preparing the 
certification. In cases where the producer is required to review the 
materials, the Department believes that U.S. producers for sound 
business reasons already review the materials they obtain from foreign 
producers, and the review contemplated by the certification would 
involve little or no additional cost. In particular, the Department 
does not believe this review would be required to be conducted by an 
attorney, as a good-faith belief that the material does not depict 
minors would be sufficient to meet the certification's standard.
    Accordingly, even assuming that the Department understated the 
number of producers by a factor of one hundred as stated by one comment 
cited above, resulting in an estimate of roughly 100,000 producers in 
the United States, and further estimating that 90% of these producers 
qualify for the exemption, the total cost of preparing the 
certification required for the statutory exemption would be 
approximately $4.5 million (100,000 producers times 90% times $50 
each). Given that a study submitted as a comment to the proposed rule 
implementing section 2257 (and submitted as an attachment to a comment 
on the proposed rule implementing section 2257A) estimated that the 
adult industry had revenues of $12.9 billion in 2006 ($9.2 billion from 
sectors including: video sales and rentals, the Internet, magazines, 
cable/satellite/hotel, and mobile), the Department believes the $4.5 
million estimated cost of preparing the certification is not excessive.
    In the proposed rule, the Department estimated that if 3,000,000 
visual depictions of simulated sexually explicit conduct are created 
each year and that it requires 6 minutes to complete the record-keeping 
requirement for each depiction, the record-keeping requirements would 
impose a burden of 300,000 hours. Based on the Department's estimation 
that producers of 90% of these depictions would qualify for the 
statutory exemption from these requirements, the proposed rule 
estimated that the requirements would only impose a burden of 30,000 
hours. The Department further estimated that the record-keeping 
requirements would cost $6.00 per hour to complete and $0.05 for each 
image of a verifiable form of identification.
    The Department received two comments on its estimate for collecting 
the required records for those producers that do not qualify for the 
statutory exemption. One comment states that it was ``ludicrous'' for 
the Department to estimate that it would only take six minutes to 
complete the record-keeping requirement for each depiction, estimating 
four performers in each depiction, often foreign records for each 
performer, and the need to cross-reference the records to the 
performance. The comment states that ``there is no possibility that the 
process could take only six minutes, even for one performer.'' The 
other comment states that it is ``extraordinarily unlikely that * * * 
record-keeping associated with certification would `cost $6.00 per hour 
to complete.' ''
    The Department notes, however, that a study submitted as a comment 
to the proposed rule implementing section 2257 (and submitted as an 
attachment to a comment on the proposed rule implementing section 
2257A) ``assume[d], based on industry interviews, that * * * [i]t takes 
at least three minutes to complete a Section 2257 file for a photograph 
* * * [and] [t]he market rate in California for a worker who can 
complete a Section 2257 file without error quickly is $20 per hour, 
including all benefits.'' The Department thus declines to accept the 
comment that a six-minute-per-depiction estimate is unrealistic, but 
accepts the comment that its $6 per hour estimate for these record-
keeping tasks understates the costs. Given the nature of the work and 
the availability of software to assist in the record-keeping, it seems 
unlikely that the associated tasks would require skilled labor. Even 
providing roughly 130% of the Federal minimum wage for work that would 
appear to be essentially data

[[Page 77464]]

entry would yield only $10 per hour. Therefore, the Department rejects 
the view that $20 per hour is an accurate estimate, but adopts $10 as 
more reasonable.
    No commenter disputed the Department's 3,000,000 images figure. 
Therefore, the Department continues to estimate that 3,000,000 visual 
depictions potentially covered by the statutory exemption are created 
each year. Applying its estimation that it takes 6 minutes to complete 
the record-keeping requirement for each depiction, the Department 
therefore continues to calculate that the record-keeping requirements 
would impose a burden of 300,000 hours. Although one commenter alleged 
that the Department understated the number of producers by 100 to 1, no 
commenter disputed that 90% of those producers would qualify for the 
statutory exemption. Hence, based on the Department's continued 
estimation that producers of 90% of the 3,000,000 depictions would 
qualify for the statutory exemption from these requirements, the final 
rule continues to estimate that the requirements would only impose a 
burden of 30,000 hours. The Department now estimates, however, that the 
record-keeping requirements would cost $10.00 per hour to complete. In 
an abundance of caution, to account for the costs of software noted 
above, the Department now estimates that each image would cost $.10 to 
process (i.e., twice the original estimate). Furthermore, the 
Department, based on the comment claiming underestimation of the number 
of primary and secondary producers by 100 to 1, adopts 100,000 as the 
total number of affected producers. Accordingly, the Department now 
estimates that the total annual cost for the 10% of entities (i.e., 
10,000) not qualifying for the statutory exemption would be $330,000 
(30,000 hours times $10 per hour, plus $.10 times 300,000 images). 
Thus, the average cost to an individual small business producer who did 
not qualify for the exemption would be $33.00 per year ($330,000 
divided by 10,000). Even at the commenter's suggested $20, the cost per 
small business would be $66.00 per year. As mentioned above, even a 
small business in the lowest revenue level would find this cost to be 
manageable.

Paperwork Reduction Act

    This final rule modifies existing requirements to conform to newly 
enacted legislation. It contains a revised information collection that 
satisfies the requirements of existing regulations to clarify the means 
of maintaining and organizing the required documents. This information 
collection will be submitted to the Office of Management and Budget for 
regular approval in accordance with the Paperwork Reduction Act of 
1995. In the proposed rule, the Department asked for public comment on 
four issues: (1) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility; (2) the 
accuracy of the agency's estimate of the burden of the proposed 
collection of information, including the validity of the methodology 
and estimations used; (3) how to enhance the quality, utility, and 
clarity of the information to be collected; and (4) how to minimize the 
burden of the collection of information on those who are to respond, 
including through the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology (e.g., permitting electronic submission of 
responses). The Department estimated that there are 500,000 Web sites 
and at least 200 producers of DVDs, videos, and other images containing 
visual depictions of actually explicit conduct (as defined by the 
revised section 2257), constituting 5000 businesses, and invited 
comments on these estimates. The Department also invited comments on 
its estimates that the proposed rule implementing section 2257 applied 
to 2,000,000 depictions of actual sexually explicit conduct (including 
the visual depictions of lascivious exhibition of the genitals or pubic 
area of a person not covered by the regulation), that each depiction 
would generate 6 minutes to complete its associated record-keeping, and 
that the record-keeping requirements would impose a burden of 200,000 
hours.
    Two comments state that the entire record-shifting burden arises 
from the requirement that records be maintained at the producer's own 
place of business. If third parties were custodians, and their location 
were properly disclosed, then both primary and secondary producers 
could rely on the same third-party custodian using the same disclosure 
statement. This would minimize the record-keeping burdens by 
concentrating them on third parties who were willing and able to 
receive the information and then organize, maintain, and make the 
information available for inspection. The comments posit that there may 
be interest in the regulated industry to assist in having third-party 
professional record-keepers trained and compliant in the record-
keeping. These third parties would perform cross-reference and 
maintenance, and allow records to be available for forty hours per 
week, dramatically easing the overall burdens. According to the 
comments, the secondary producer could then fulfill its record-keeping 
obligations by merely referring to the location of the records created 
by the primary producer.
    The Department adopts the comments in part. As stated above, the 
Department believes that its objectives can be accomplished and the 
burden reduced on small business by allowing producers to use third-
party custodians to store their records. The final rule reflects this 
change from the proposed rule. The Department believes, however, as 
stated above, that a secondary producer who does not actually see 
copies of identification cards that the primary producer uses to prove 
that the performer was at least 18 years old as of the date of original 
production may take an unnecessary risk of distributing child 
pornography.
    One comment remarked that some producers of actual sexually 
explicit conduct exist only virtually and that their records should 
therefore be permitted to be created only virtually. The Department 
accepts this comment in part. Regardless of the nature of the entity 
that produces actual sexually explicit conduct, the final rule permits 
records to be kept in electronic form.
    One comment states that subjecting those who exclusively produce 
depictions involving lascivious exhibitions to record-keeping as of 
July 2006 would create a paperwork burden not intended by Congress. The 
comment expressed the view that Congress intended to reduce these 
entities' paperwork by creating a certification process. As stated 
above, the Department is delaying the imposition of the record-keeping 
requirements for entities whose activities enable them to confirm to 
the certification safe harbor until such time as the Department issues 
the final rule that implements section 2257A.
    One comment notes the burden imposed by having each Web page 
contain a substantial amount of regulatory information to enable the 
producer to display otherwise constitutionally protected expression 
without criminal penalties, which it contends violates free expression. 
The Department adopts this comment in part. The final rule's display 
requirements will not require substantial regulatory information, but 
will permit hyperlinks. The Department does not accept the remainder of 
the comment. Under the terms of the final rule, producers of 
constitutionally

[[Page 77465]]

protected depictions of actual sexually explicit conduct will be fully 
able to create such images without risk of criminal penalties so long 
as they maintain records and affix a disclosure statement to each page 
that displays such an image. Without such compliance, there is no 
guarantee that the depiction is in fact constitutionally protected 
expression. In fact, experience demonstrates that there is too great a 
likelihood that a child will have been victimized by such a depiction, 
and that such a depiction may be used to victimize others.
    Four comments state that compliance with the proposed rule is 
expensive, invasive, and burdensome. One comment notes that the 
proposed rule placed a burden on a person who displayed depictions of 
actual sexually explicit conduct to keep and distribute information to 
strangers about the performers. The Department adopts these comments in 
part. Although some of the requirements of the Adam Walsh Act will 
result in additional expenses for businesses, the Department has 
reduced those burdens in the final rule. It has eliminated the hard 
copy requirement, permitted hyperlinks rather than complete disclosure 
statements on each Web page, and permitted producers to place required 
records in the hands of third-party custodians. Primary producers must 
share information on performers with secondary producers, but that is a 
requirement of the Act.
    Two comments state that hard copy is not required and is very 
expensive. One comment says that hard copy is counter to the 
requirements of the Paperwork Reduction Act requirement that agencies 
minimize the burden of information collections through appropriate 
electronic or other information technology. One comment notes that some 
Web sites have many thousands of pages of actual sexually explicit 
material, and it argues that there is no reason for a hard copy. 
Inexpensive scanners, it maintains, can produce digital depictions at a 
resolution such as 300 dots per inch that can eliminate the need to 
read a copy of the identification document, and that hard copies may be 
less clear for inspectors. The Department accepts these comments, 
without necessarily agreeing with the characterization of the proposed 
rule under the PRA and, as stated, will permit the required records to 
be stored electronically.
    One comment notes that the proposed rule is burdensome given its 
requirements concerning the date of original production, which would 
mandate overhauling each and every disclosure on a Web site after 
identifying such a date for those images. The Department adopts this 
comment. Identification of the original date of production is crucial 
to the inspection process, and the records must indicate that date; 
however, it is not necessary to have on the disclosure statement. 
Accordingly, the final rule eliminates Sec.  75.6(B)(2).
    Four comments state that the proposed rule would achieve none of 
its stated goals, either because people will lie about their age or 
produce fake identification documents or because illicit entities would 
not keep records. Thirty-five comments claim that the rule would do 
little to protect minors or curb child pornography.
    The Department does not adopt these comments. People who lie about 
their age must still produce identification cards, or the producers 
will be criminally liable for depicting them. The Department cannot 
guarantee that some individuals will not provide fake documents, but 
such individuals risk incurring criminal penalties, and the Department 
believes that the existence of these penalties will persuade many 
people who would be tempted to use fake documentation to avoid doing 
so. Further, the Department believes the rule will achieve its 
objective of implementing the policies of the Act, whether or not it is 
completely successful in eradicating the production of all child 
pornography.
    On a related issue, one comment notes that false identification 
cards can appear authentic and lead to the production of many 
depictions and subsequent republications of the performer's image. 
However, since the rule requires that a copy of each image must be kept 
in the records of each of the many producers, the comment asks what 
producers are to do once the fraud is revealed. It states that 
producers will destroy their images when the fraud is revealed, but 
asks if the rule permits the destruction of the records, and if not, 
asks how custodians would be protected against state laws that 
criminalize even the private possession of child pornography.
    The Department responds to this comment by stating that records of 
the production of such depictions must be retained even after the fraud 
is discovered. The Department would need to be able to inspect the 
identification documents that were provided as a basis for creating the 
depiction.
    One comment states that secondary producers cannot determine if a 
scanned or faxed document was actual or altered, and could unknowingly 
accept false information. The comment questions whether the producer 
would be shielded from prosecution if the primary producer presents 
false or altered documents, and asks whether there will be a database 
for the secondary producer to check whether the primary producer's age 
documents are valid, as would be the case with a passport.
    The Department responds to this comment by stating that the 
secondary producer must keep a copy of the relevant identification 
documents under the terms of the rule. So long as the producer keeps a 
copy of the document that reasonably appears to conform to the 
requirements of the rule, the producer will not face criminal 
liability. But as stated above, the producer must keep the records even 
if the image turns out not to relate to a performer of legal age. As 
discussed above, the Department will not establish a database as part 
of this rule.
    One comment states that secondary producers have no relationship 
with the performers depicted in actual sexually explicit conduct, and 
that applying the record-keeping requirements to them therefore 
accomplishes nothing. The Department does not adopt this comment. 
Unless the secondary performer keeps appropriate records, then the 
fears that Congress expressed that secondary producers will knowingly 
or unknowingly create a commercial market for child pornography may 
materialize.
    One comment contends that the proposed rule's requirement that 
information be placed on every page will not make the required 
information more easily accessible to the Department, and that it will 
increase compliance costs. The Department does not adopt this comment. 
Placement of the required information on every page will enable the 
Department to determine that any given depiction of actual sexual 
conduct is of a person who is of appropriate age, and the adherence to 
this requirement will make that information more accessible to the 
Department. Additionally, the Act requires that the Department's final 
rule impose such a requirement, and the Department notes that the final 
rule will impose the minimal compliance costs associated with the Act's 
requirement by permitting hyperlinks rather than the full disclosure 
statement to appear on each regulated page.
    One comment concedes that the cross-referencing requirement has a 
governmental purpose when an inspector needs to obtain performance 
records based upon a legal name or an alias or a title of a work. 
However, the

[[Page 77466]]

comment contends that there is no basis to require cross-referencing so 
that an inspector can obtain an alias name that was never used in 
productions and was never used as an adult, or records concerning 
unknown works.
    The Department does not adopt this comment. The Department would 
not know (and questions whether many producers would know) that an 
alias was never used in productions. If an alias had in fact been used 
in productions, it is vital for the Department to be able to determine 
that such depictions were originally produced when the performers were 
over 18. If an alias was never used while a performer was an adult, it 
may have been used when the performer was a child. Being able to trace 
records when the performer may have been a minor is of obvious 
significance to the Department's efforts to combat child exploitation.
    One comment requests that the Department prepare a form analogous 
to an IRS form that, if properly completed, will assure the filer that 
it has complied with all statutory and regulatory reporting 
requirements. The form would be available for employers to record the 
fact that they have examined appropriate identification requirements 
before employing any individual in covered employment. The comment 
believes that primary producers should not have to guess concerning the 
required content of their records or to seek expensive legal advice 
from attorneys. The comment recommends that the form should be one that 
is used to create paper records or that can be digitally incorporated 
into record-keeping software for those who choose to keep the records 
in digital form.
    The Department does not adopt this requirement. It is not possible 
for the Department to create a form that would ensure that the 
regulated entity has complied with all requirements. It is the actual 
performance of the checking function that the record-keeping must 
document. Individualized records must be kept, rather than filling out 
a form indicating merely that identity was checked. Moreover, copies of 
the identification cards must be kept to prove that the performers were 
of age. Finally, the comment seeks what is essentially a compliance 
certification procedure rather than a record-keeping principle. 
Congress created a particular means by which entities may be found to 
be in compliance with the rule even though the statutory record-keeping 
and disclosure requirements are not adhered to. The Department is not 
free to write another alternative method of compliance.
    Two comments claim that the current regulations are more than 
adequate to fulfill their purpose. The Department does not accept this 
comment. Congress enacted the Act to impose additional requirements to 
prevent the production of child pornography because section 2257's pre-
Act definition of ``actual sexually explicit conduct'' and accompanying 
regulations were insufficient to achieve that objective. The Department 
must therefore issue the final rule per statutory command and believes 
that these additional requirements will make the production of child 
pornography more difficult than under current rules.
    One comment states that some sites have many thousands of images 
and that each would take many kilobytes of storage and that the largest 
sites would need many gigabytes of storage to comply with the rule. It 
claims that sites with streaming video need to retain seven years' 
worth of recorded video. According to the comment, regardless of 
whether video is live or recorded, and regardless of whether copies are 
held in hard form or electronically, the size and number of video files 
will create a significant burden, in some cases requiring storage of 
gigabytes of data or thousands of videos. The comment wonders what 
governmental benefits these requirements will produce.
    The Department does not adopt this comment. As to live 
performances, the proposed rule specifically provides, ``For any 
performer in a depiction performed live on the Internet, the records 
shall include a copy of the depiction with running-time sufficient to 
identify the performer in the depiction and to associate the performer 
with the records needed to confirm his or her age.'' 72 FR at 38036. 
This will significantly reduce the storage costs the commenter 
discusses. As to recorded performances, the Department does not accept 
the alleged burdensome nature of the storage costs. The district court 
in Free Speech Coalition v. Gonzales favorably cited the Department's 
expert witness to the effect that ``large numbers of depictions can be 
electronically stored by purchasing hard drives at insubstantial 
prices.'' Free Speech I, 406 F. Supp. 2d at 1208.
    Several commenters address the time period for the retention of 
records. One comment views the seven-year record retention requirement 
as excessive, noting that at three inspections per year, the producer 
would face 20 or 21 inspection cycles. The comment believes that there 
is no reason why that many inspections would be needed for a particular 
record and that the Department would learn the actual age of a depicted 
performer before so many inspections were carried out. The comment asks 
that the final rule make clear that the records of a depiction can be 
disposed of seven years after a depiction's creation, and that a 
producer's records concerning a performer can be disposed of seven 
years after the performer is last depicted by the producer.
    One comment points out that the required time for keeping records 
can be seventeen years. If a corporation leaves the adult entertainment 
business just before the seven-year record-keeping requirement, it must 
keep the records for an additional five years. And if the company goes 
out of business altogether, then the individual custodian must keep the 
records for another five years. The comment asks that the final rule 
should say that the operative period is the shortest of whichever of 
these three contingencies occurs first.
    One comment notes that a secondary producer must keep the relevant 
record for seven years after the depiction was reproduced, perhaps 
beginning seven years after the depiction was produced. The comment 
points out that the information in the records properly relates to the 
initial production and not the reproduction. It posits that there is no 
reason to restart the clock for each republication. The comment also 
expresses concern that requiring the records to be maintained as long 
as the depiction is in circulation would be so cumulatively burdensome 
as to unconstitutionally harm expression.
    One comment asks that no one be required to keep records of a 
particular depiction more than seven years after it was initially 
created. A secondary producer may want to reproduce a depiction eight 
years after it was made, but the primary producer may have eliminated 
the records. The comment asks whether the secondary producer can 
reproduce without the records, or its further reproduction is 
restricted at the cost of the constitutional rights of the primary 
producer who is also now quite lawfully without the records.
    The Department declines to adopt these comments. Concerns about the 
retention period for records were addressed in the final rule published 
in 2005. At that time, the Department stated, ``The regulation provides 
for retention of records for seven years from production or last 
amendment and five years from cessation of production by a business or 
dissolution of the company. The Department does not believe that these 
limits are unreasonable. The only way to satisfy the commenters' 
objection that the periods of time can multiply

[[Page 77467]]

would be to impose a blanket short period of time no matter what 
changes to the records were made. Such a change would frustrate the 
ability to ensure that records were maintained up-to-date and prevent 
inspectors from examining older records to determine if a violation had 
been committed. In addition, the time periods, contrary to the claim of 
the commenters, do not violate American Library Association v. Reno. In 
that case, the DC Circuit held that part 75 could not require records 
to be maintained for as long as the producer remained in business and 
allowed a five-year retention period `[p]ending its replacement by a 
provision more rationally tailored to actual law enforcement needs.' 33 
F.3d at 91. The Department has determined that the seven-year period is 
reasonable, thus satisfying the court's directive. The production of 
child pornography statute of limitations was increased in the PROTECT 
Act from five years to the life of the child, and the increase 
contained in the regulation seeks to comport with that extended statute 
of limitations. Finally, the Department wishes to clarify that the 
statute requires that each time a producer publishes a depiction, he 
must have records proving that the performers are adults. Thus, if a 
producer purges his or her records after the retention period but 
continues to use a picture for publication, the producer would be 
deemed in violation of the statute for not maintaining records that the 
person depicted was an adult. Records are required for every iteration 
of an image in every instance of publication.'' 70 FR at 29614.
    One comment believes that the proposed rule's record-keeping 
requirements impose a heavy burden. It argues that copies of the full 
set of required records must follow any depiction to any secondary 
producer who assists in disseminating the constitutionally protected 
expression, which will restrict such dissemination.
    The Department does not adopt this comment. Although a burden is 
imposed by the record-keeping requirement, it is necessary that 
secondary producers retain copies of records that the primary producer 
examined prior to producing depictions of sexually explicit conduct. 
Otherwise, there is no way to determine that the depiction is in fact 
constitutionally protected expression rather than a record of child 
exploitation. Since preventing the existence of a commercial market for 
child pornography is a major purpose of the Act, the Department 
believes that it has adopted the least-restrictive burden for secondary 
producers and the Department to be sure that the performers were of 
legal age on the original production date of the depiction of actual 
sexually explicit conduct.
    One comment points out that because a secondary producer cannot 
assemble records from scratch, he should be able to receive a copy of 
the primary producer's records so long as the secondary producer also 
obtains, records, and maintains the primary producer's business 
address. The comment expressed a belief that the volume and complexity 
of the requirements will limit the distribution of constitutionally 
protected material. It complains that if a primary producer licenses 
some but not all of a set of its images, it will be difficult for a 
secondary producer to untangle the cross-references so that the 
secondary possesses the required records (because possessing extraneous 
matter subjects that individual to a five-year sentence per Sec.  
75.2(e)). The comment anticipates that some primary producers will not 
want to share records concerning identification cards because secondary 
producers might compete with those primary producers if they knew where 
to find the performers. Moreover, if the performer obtained an 
agreement from the primary producer not to use a secondary producer to 
republish their depiction, then constitutionally protected expression 
will be frozen out of existence.
    The Department does not adopt this comment. For a secondary 
producer to know that as of the original production date, the 
performers were of legal age, copies of the records of the primary 
producer must be provided that demonstrate that fact. To identify the 
appropriate primary producer, the secondary producer must keep records 
itself. The only means of ensuring that children are not performing in 
the depiction is to determine the birthdates of the performers and to 
keep records. The Department must have access to these records to 
ensure that children are not being depicted. First Amendment rights are 
not implicated if, in response to the rule, primary producers choose 
not to share records because they fear that secondary producers may 
compete with them. Moreover, if a performer obtains an agreement 
through an agent that the primary producer will not use a secondary 
producer to republish a depiction, then the reason that the secondary 
producer would become unable to obtain the image is through the 
operation of the agreement, whether or not the Department had ever 
issued any regulations. The First Amendment is not implicated under 
those circumstances.
    One comment states that a secondary producer can satisfy the Act by 
requiring only an email or a letter from the primary producer attesting 
to the availability of the date of birth documentation's availability 
at the primary producer's place of business, unless the secondary 
producer is also a primary producer. The Department does not adopt this 
comment. A secondary producer's reliance on an email or letter does not 
ensure that the secondary producer actually retains records documenting 
that the performer was of legal age as of the date of original 
production.
    One comment notes that each Web site can contain multiple 
depictions, which may have been created on different dates. Each 
webmaster would have to develop a unique system of cross-referencing, 
coding, or identifying the production date of each depiction. The 
comment would prefer that webmasters be permitted to identify the most 
relevant date, of either production, duplication, reproduction, or 
reissuance of a depiction.
    The Department does not adopt this comment. Apart from the lack of 
clarity concerning what the most relevant date from the choices above 
for a particular depiction, the Department believes that the date of 
original production is a critical element for the disclosure statement 
that Congress has required. Confirmation of the date of birth of the 
performer and of the date of original production are the two most 
important pieces of information necessary to be recorded if child 
pornography is to be kept out of production and commercial 
distribution. Knowledge of only a later date that is unrelated to the 
date of original production of the image will not ensure that the 
performer was of legal age as of the date that the depiction was 
created, the key factor determining whether a particular depiction is 
child pornography or not.
    Two comments oppose cross-referencing requirements because, the 
commenters say, they are a means only to harass producers. The 
Department does not adopt this comment. Cross-referencing requirements, 
as described above, are vital to determining whether a performer under 
any name that the performer has used has been depicted in actual 
sexually explicit conduct despite their status as a minor. Cross-
referencing will enable the Department to establish, whatever name may 
be used, whether a performer's identification card demonstrates 
legality of age for such productions.

[[Page 77468]]

    Two comments suggest that the burden of segregating records in 
Sec.  75.2(d) and (e) is too stringent. One points out that if a stray 
1099 form, model release, or I-9 form were to wind up in the section 
2257 records instead of the more general personnel file, then the 
producer or custodian would face years in prison. The comment contends 
that there should be a different rule for inadvertent misfiling.
    The Department does not accept this comment. The segregation 
requirement in fact reduces the burden that the rule imposes upon the 
regulated entity. Due to segregation of records, the inspector need 
only review a unified set of records, without need to search every 
document in the facility.
    Two comments request that the final rule reduce the burden on 
primary producers by not requiring that they make or receive sworn 
statements that all content is legal and all models are over 18. The 
Department declines to adopt this comment, as it describes the effect 
of neither the proposed rule nor existing regulation.
    The Department received no comments challenging its estimates that 
2,000,000 depictions of actual sexually explicit conduct would be 
generated this year, that the associated record-keeping for each 
depiction would amount to 6 minutes, and that the total related burden 
of compliance for this category was 200,000 hours, and it therefore 
continues to adhere to these estimates. Two million depictions at a 
cost of $10 per hour of record-keeping and a duplication cost of $0.10 
per depiction produces a total cost of compliance with the final 
section 2257 rule of $2,400,000.
    The OMB Control Number pertaining to the rule is 1105-0083.

List of Subjects in 28 CFR Part 75

    Crime, infants and children, Reporting and record-keeping 
requirements.


0
Accordingly, for the reasons set forth in the preamble, part 75 of 
chapter I of title 28 of the Code of Federal Regulations is amended as 
follows:

PART 75--CHILD PROTECTION RESTORATION AND PENALTIES ENHANCEMENT ACT 
OF 1990; PROTECT ACT; ADAM WALSH CHILD PROTECTION AND SAFETY ACT OF 
2006; RECORDKEEPING AND RECORD-INSPECTION PROVISIONS

0
1. The authority citation for part 75 is revised to read as follows:

    Authority: 18 U.S.C. 2257, 2257A.


0
2. The heading of part 75 is revised to read as set forth above.


0
3. Amend Sec.  75.1 by revising paragraphs (b), (c)(1), (c)(2), (c)(4), 
(d), and (e), and by adding paragraphs (m) through (s), to read as 
follows:


Sec.  75.1  Definitions.

* * * * *
    (b) Picture identification card means a document issued by the 
United States, a State government, or a political subdivision thereof, 
or a United States territory, that bears the photograph, the name of 
the individual identified, and the date of birth of that individual, 
and provides specific information sufficient for the issuing authority 
to confirm its validity, such as a passport, Permanent Resident Card 
(commonly known as a ``Green Card''), or employment authorization 
document issued by the United States, a driver's license or other form 
of identification issued by a State or the District of Columbia; or a 
foreign government-issued equivalent of any of the documents listed 
above when the person who is the subject of the picture identification 
card is a non-U.S. citizen located outside the United States at the 
time of original production and the producer maintaining the required 
records, whether a U.S. citizen or non-U.S. citizen, is located outside 
the United States on the original production date. The picture 
identification card must be valid as of the original production date.
* * * * *
    (c) * * *
    (1) Primary producer is any person who actually films, videotapes, 
photographs, or creates a digitally- or computer-manipulated image, a 
digital image, or a picture of, or who digitizes an image of, a visual 
depiction of an actual human being engaged in actual or simulated 
sexually explicit conduct. When a corporation or other organization is 
the primary producer of any particular image or picture, then no 
individual employee or agent of that corporation or other organization 
will be considered to be a primary producer of that image or picture.
    (2) Secondary producer is any person who produces, assembles, 
manufactures, publishes, duplicates, reproduces, or reissues a book, 
magazine, periodical, film, videotape, or digitally- or computer-
manipulated image, picture, or other matter intended for commercial 
distribution that contains a visual depiction of an actual human being 
engaged in actual or simulated sexually explicit conduct, or who 
inserts on a computer site or service a digital image of, or otherwise 
manages the sexually explicit content of a computer site or service 
that contains a visual depiction of, an actual human being engaged in 
actual or simulated sexually explicit conduct, including any person who 
enters into a contract, agreement, or conspiracy to do any of the 
foregoing. When a corporation or other organization is the secondary 
producer of any particular image or picture, then no individual of that 
corporation or other organization will be considered to be the 
secondary producer of that image or picture.
* * * * *
    (4) Producer does not include persons whose activities relating to 
the visual depiction of actual or simulated sexually explicit conduct 
are limited to the following:
    (i) Photo or film processing, including digitization of previously 
existing visual depictions, as part of a commercial enterprise, with no 
other commercial interest in the sexually explicit material, printing, 
and video duplication;
    (ii) Distribution;
    (iii) Any activity, other than those activities identified in 
paragraphs (c)(1) and (2) of this section, that does not involve the 
hiring, contracting for, managing, or otherwise arranging for the 
participation of the depicted performers;
    (iv) The provision of a telecommunications service, or of an 
Internet access service of Internet information location tool (as those 
terms are defined in section 231 of the Communications Act of 1934 (47 
U.S.C. 231));
    (v) The transmission, storage, retrieval, hosting, formatting, or 
translation (or any combination thereof) of a communication, without 
selection or alteration of the content of the communication, except 
that deletion of a particular communication or material made by another 
person in a manner consistent with section 230(c) of the Communications 
Act of 1934 (47 U.S.C. 230(c)) shall not constitute such selection or 
alteration of the content of the communication; or
    (vi) Unless the activity or activities are described in section 
2257(h)(2)(A), the dissemination of a depiction without having created 
it or altered its content.
    (d) Sell, distribute, redistribute, and re-release refer to 
commercial distribution of a book, magazine, periodical, film, 
videotape, digitally- or computer-manipulated image, digital image, 
picture, or other matter that contains a visual depiction of an actual 
human being engaged in actual or simulated sexually explicit conduct, 
but does not refer to noncommercial or

[[Page 77469]]

educational distribution of such matter, including transfers conducted 
by bona fide lending libraries, museums, schools, or educational 
organizations.
    (e) Copy, when used:
    (1) In reference to an identification document or a picture 
identification card, means a photocopy, photograph, or digitally 
scanned reproduction;
    (2) In reference to a visual depiction of sexually explicit 
conduct, means a duplicate of the depiction itself (e.g., the film, the 
image on a Web site, the image taken by a webcam, the photo in a 
magazine); and
    (3) In reference to an image on a webpage for purposes of 
Sec. Sec.  75.6(a), 75.7(a), and 75.7(b), means every page of a Web 
site on which the image appears.
* * * * *
    (m) Date of original production or original production date means 
the date the primary producer actually filmed, videotaped, or 
photographed, or created a digitally- or computer-manipulated image or 
picture of, the visual depiction of an actual human being engaged in 
actual or simulated sexually explicit conduct. For productions that 
occur over more than one date, it means the single date that was the 
first of those dates. For a performer who was not 18 as of this date, 
the date of original production is the date that such a performer was 
first actually filmed, videotaped, photographed, or otherwise depicted. 
With respect to matter that is a secondarily produced compilation of 
individual, primarily produced depictions, the date of original 
production of the matter is the earliest date after July 3, 1995, on 
which any individual depiction in that compilation was produced. For a 
performer in one of the individual depictions contained in that 
compilation who was not 18 as of this date, the date of original 
production is the date that the performer was first actually filmed, 
videotaped, photographed, or otherwise depicted for the individual 
depiction at issue.
    (n) Sexually explicit conduct has the meaning set forth in 18 
U.S.C. 2256(2)(A).
    (o) Simulated sexually explicit conduct means conduct engaged in by 
performers that is depicted in a manner that would cause a reasonable 
viewer to believe that the performers engaged in actual sexually 
explicit conduct, even if they did not in fact do so. It does not mean 
not sexually explicit conduct that is merely suggested.
    (p) Regularly and in the normal course of business collects and 
maintains means any business practice(s) that ensure that the producer 
confirms the identity and age of all employees who perform in visual 
depictions.
    (q) Individually identifiable information means information about 
the name, address, and date of birth of employees that is capable of 
being retrieved on the basis of a name of an employee who appears in a 
specified visual depiction.
    (r) All performers, including minor performers means all performers 
who appear in any visual depiction, no matter for how short a period of 
time.
    (s) Employed by means, in reference to a performer, one who 
receives pay for performing in a visual depiction or is otherwise in an 
employer-employee relationship with the producer of the visual 
depiction as evidenced by oral or written agreements.

0
4. Amend Sec.  75.2 by:
0
a. Revising paragraph (a) introductory text and paragraphs (a)(1) and 
(a)(2), and adding paragraph (a)(4);
0
b. Adding two sentences at the end of paragraph (b);
0
c. Revising paragraphs (c) and (d); and
0
d. Adding paragraphs (g) and (h).
    The additions and revisions read as follows:


Sec.  75.2  Maintenance of records.

    (a) Any producer of any book, magazine, periodical, film, 
videotape, digitally- or computer-manipulated image, digital image, 
picture, or other matter that is produced in whole or in part with 
materials that have been mailed or shipped in interstate or foreign 
commerce, or is shipped, transported, or intended for shipment or 
transportation in interstate or foreign commerce, and that contains one 
or more visual depictions of an actual human being engaged in actual 
sexually explicit conduct (except lascivious exhibition of the genitals 
or pubic area of any person) made after July 3, 1995, or one or more 
visual depictions of an actual human being engaged in simulated 
sexually explicit conduct or in actual sexually explicit conduct 
limited to lascivious exhibition of the genitals or pubic area of any 
person made after March 18, 2009, shall, for each performer portrayed 
in such visual depiction, create and maintain records containing the 
following:
    (1) The legal name and date of birth of each performer, obtained by 
the producer's examination of a picture identification card prior to 
production of the depiction. For any performer portrayed in a depiction 
of an actual human being engaged in actual sexually explicit conduct 
(except lascivious exhibition of the genitals or pubic area of any 
person) made after July 3, 1995, or of an actual human being engaged in 
simulated sexually explicit conduct or in actual sexually explicit 
conduct limited to lascivious exhibition of the genitals or pubic area 
of any person made after March 18, 2009, the records shall also include 
a legible hard copy or legible digitally scanned or other electronic 
copy of a hard copy of the identification document examined and, if 
that document does not contain a recent and recognizable picture of the 
performer, a legible hard copy of a picture identification card. For 
any performer portrayed in a depiction of an actual human being engaged 
in actual sexually explicit conduct (except lascivious exhibition of 
the genitals or pubic area of any person) made after June 23, 2005, or 
of an actual human being engaged in simulated sexually explicit conduct 
or in actual sexually explicit conduct limited to lascivious exhibition 
of the genitals or pubic area of any person made after March 18, 2009, 
the records shall include a copy of the depiction, and, where the 
depiction is published on an Internet computer site or service, a copy 
of any URL associated with the depiction. If no URL is associated with 
the depiction, the records shall include another uniquely identifying 
reference associated with the location of the depiction on the 
Internet. For any performer in a depiction performed live on the 
Internet, the records shall include a copy of the depiction with 
running-time sufficient to identify the performer in the depiction and 
to associate the performer with the records needed to confirm his or 
her age.
    (2) Any name, other than the performer's legal name, ever used by 
the performer, including the performer's maiden name, alias, nickname, 
stage name, or professional name. For any performer portrayed in a 
visual depiction of an actual human being engaged in actual sexually 
explicit conduct (except lascivious exhibition of the genitals or pubic 
area of any person) made after July 3, 1995, or of an actual human 
being engaged in simulated sexually explicit conduct or in actual 
sexually explicit conduct limited to lascivious exhibition of the 
genitals or pubic area of any person made after March 18, 2009, such 
names shall be indexed by the title or identifying number of the book, 
magazine, film, videotape, digitally- or computer-manipulated image, 
digital image, picture, URL, or other matter. Producers may rely in 
good faith on representations by performers regarding accuracy of the 
names, other than legal names, used by performers.
* * * * *

[[Page 77470]]

    (4) The primary producer shall create a record of the date of 
original production of the depiction.
    (b) * * * The copies of the records may be redacted to eliminate 
non-essential information, including addresses, phone numbers, social 
security numbers, and other information not necessary to confirm the 
name and age of the performer. However, the identification number of 
the picture identification card presented to confirm the name and age 
may not be redacted.
    (c) The information contained in the records required to be created 
and maintained by this part need be current only as of the date of 
original production of the visual depiction to which the records are 
associated. If the producer subsequently produces an additional book, 
magazine, film, videotape, digitally- or computer-manipulated image, 
digital image, or picture, or other matter (including but not limited 
to an Internet computer site or service) that contains one or more 
visual depictions of an actual human being engaged in actual or 
simulated sexually explicit conduct made by a performer for whom he 
maintains records as required by this part, the producer may add the 
additional title or identifying number and the names of the performer 
to the existing records maintained pursuant to Sec.  75.2(a)(2). 
Producers of visual depictions made after July 3, 1995, and before June 
23, 2005, may rely on picture identification cards that were valid 
forms of required identification under the provisions of part 75 in 
effect during that time period.
    (d) For any record of a performer in a visual depiction of actual 
sexually explicit conduct (except lascivious exhibition of the genitals 
or pubic area of any person) created or amended after June 23, 2005, or 
of a performer in a visual depiction of simulated sexually explicit 
conduct or actual sexually explicit conduct limited to lascivious 
exhibition of the genitals or pubic area of any person made after March 
18, 2009, all such records shall be organized alphabetically, or 
numerically where appropriate, by the legal name of the performer (by 
last or family name, then first or given name), and shall be indexed or 
cross-referenced to each alias or other name used and to each title or 
identifying number of the book, magazine, film, videotape, digitally- 
or computer-manipulated image, digital image, or picture, or other 
matter (including but not limited to an Internet computer site or 
service). If the producer subsequently produces an additional book, 
magazine, film, videotape, digitally- or computer-manipulated image, 
digital image, or picture, or other matter (including but not limited 
to an Internet computer site or service) that contains one or more 
visual depictions of an actual human being engaged in actual or 
simulated sexually explicit conduct made by a performer for whom he 
maintains records as required by this part, the producer shall add the 
additional title or identifying number and the names of the performer 
to the existing records, and such records shall thereafter be 
maintained in accordance with this paragraph.
* * * * *
    (g) Records are not required to be maintained by either a primary 
producer or by a secondary producer for a visual depiction of sexually 
explicit conduct that consists only of lascivious exhibition of the 
genitals or pubic area of a person, and contains no other sexually 
explicit conduct, whose original production date was prior to March 18, 
2009.
    (h) A primary or secondary producer may contract with a non-
employee custodian to retain copies of the records that are required 
under this part. Such custodian must comply with all obligations 
related to records that are required by this Part, and such a contract 
does not relieve the producer of his liability under this part.

0
5. Revise Sec.  75.4 to read as follows:


Sec.  75.4  Location of records.

    Any producer required by this part to maintain records shall make 
such records available at the producer's place of business or at the 
place of business of a non-employee custodian of records. Each record 
shall be maintained for seven years from the date of creation or last 
amendment or addition. If the producer ceases to carry on the business, 
the records shall be maintained for five years thereafter. If the 
producer produces the book, magazine, periodical, film, videotape, 
digitally- or computer-manipulated image, digital image, or picture, or 
other matter (including but not limited to Internet computer site or 
services) as part of his control of or through his employment with an 
organization, records shall be made available at the organization's 
place of business or at the place of business of a non-employee 
custodian of records. If the organization is dissolved, the person who 
was responsible for maintaining the records, as described in Sec.  
75.6(b), shall continue to maintain the records for a period of five 
years after dissolution.

0
6. Section 75.5 is amended by revising:
0
a. Paragraphs (c)(1), (c)(3), and (c)(4);
0
b. Paragraph (d); and
0
c. Paragraph (e).
    The revisions read as follows:


Sec.  75.5  Inspection of records.

* * * * *
    (c) Conduct of inspections. (1) Inspections shall take place during 
normal business hours and at such places as specified in Sec.  75.4. 
For the purpose of this part, ``normal business hours'' are from 9 a.m. 
to 5 p.m., local time, Monday through Friday, or, for inspections to be 
held at the place of business of a producer, any other time during 
which the producer is actually conducting business relating to 
producing a depiction of actual sexually explicit conduct. To the 
extent that the producer does not maintain at least 20 normal business 
hours per week, the producer must provide notice to the inspecting 
agency of the hours during which records will be available for 
inspection, which in no case may be less than 20 hours per week.
* * * * *
    (3) The inspections shall be conducted so as not to unreasonably 
disrupt the operations of the establishment.
    (4) At the conclusion of an inspection, the investigator may 
informally advise the producer or his non-employee custodian of records 
of any apparent violations disclosed by the inspection. The producer or 
non-employee custodian or records may bring to the attention of the 
investigator any pertinent information regarding the records inspected 
or any other relevant matter.
* * * * *
    (d) Frequency of inspections. Records may be inspected once during 
any four-month period, unless there is a reasonable suspicion to 
believe that a violation of this part has occurred, in which case an 
additional inspection or inspections may be conducted before the four-
month period has expired.
    (e) Copies of records. An investigator may copy, at no expense to 
the producer or to his non-employee custodian of records, during the 
inspection, any record that is subject to inspection.
* * * * *

0
7. Amend Sec.  75.6 by:
0
a. Revising paragraph (a);
0
b. Removing and reserving paragraph (b)(2), and removing the second 
sentence from paragraph (b)(3);
0
c. Revising paragraph (c); and
0
d. Adding paragraph (f).
    The addition and revisions read as follows:

[[Page 77471]]

Sec.  75.6  Statement describing location of books and records.

    (a) Any producer of any book, magazine, periodical, film, 
videotape, digitally- or computer-manipulated image, digital image, or 
picture, or other matter (including but not limited to an Internet 
computer site or service) that contains one or more visual depictions 
of an actual human being engaged in actual sexually explicit conduct 
made after July 3, 1995, and produced, manufactured, published, 
duplicated, reproduced, or reissued after July 3, 1995, or of a 
performer in a visual depiction of simulated sexually explicit conduct 
or actual sexually explicit conduct limited to lascivious exhibition of 
the genitals or pubic area of any person made after March 18, 2009, 
shall cause to be affixed to every copy of the matter a statement 
describing the location of the records required by this part. A 
producer may cause such statement to be affixed, for example, by 
instructing the manufacturer of the book, magazine, periodical, film, 
videotape, digitally- or computer-manipulated image, digital image, 
picture, or other matter to affix the statement. In this paragraph, the 
term ``copy'' includes every page of a Web site on which a visual 
depiction of an actual human being engaged in actual or simulated 
sexually explicit conduct appears.
* * * * *
    (c) If the producer is an organization, the statement shall also 
contain the title and business address of the person who is responsible 
for maintaining the records required by this part.
* * * * *
    (f) If the producer contracts with a non-employee custodian of 
records to serve as the person responsible for maintaining his records, 
the statement shall contain the name and business address of that 
custodian and may contain that information in lieu of the information 
required in paragraphs (b)(3) and (c) of this section.

0
8. Revise Sec.  75.7 to read as follows:


Sec.  75.7  Exemption statement.

    (a) Any producer of any book, magazine, periodical, film, 
videotape, digitally- or computer-manipulated image, digital image, 
picture, or other matter may cause to be affixed to every copy of the 
matter a statement attesting that the matter is not covered by the 
record-keeping requirements of 18 U.S.C. 2257(a)-(c) or 18 U.S.C. 
2257A(a)-(c), as applicable, and of this part if:
    (1) The matter contains visual depictions of actual sexually 
explicit conduct made only before July 3, 1995, or was last produced, 
manufactured, published, duplicated, reproduced, or reissued before 
July 3, 1995. Where the matter consists of a compilation of separate 
primarily produced depictions, the entirety of the conduct depicted was 
produced prior to July 3, 1995, regardless of the date of secondary 
production;
    (2) The matter contains only visual depictions of simulated 
sexually explicit conduct or of actual sexually explicit conduct 
limited to lascivious exhibition of the genitals or pubic area of any 
person, made before March 18, 2009;
    (3) The matter contains only some combination of the visual 
depictions described in paragraphs (a)(1) and (a)(2) of this section.
    (b) If the primary producer and the secondary producer are 
different entities, the primary producer may certify to the secondary 
producer that the visual depictions in the matter satisfy the standards 
under paragraphs (a)(1) through (a)(3) of this section. The secondary 
producer may then cause to be affixed to every copy of the matter a 
statement attesting that the matter is not covered by the record-
keeping requirements of 18 U.S.C. 2257(a)-(c) or 18 U.S.C. 2257A(a)-
(c), as applicable, and of this part.

0
9. Amend Sec.  75.8 by:
0
a. Revising paragraph (d);
0
b. Redesignating paragraph (e) as paragraph (f); and
0
c. Adding a new paragraph (e).
    The revisions and additions read as follows:


Sec.  75.8  Location of the statement.

* * * * *
    (d) A computer site or service or Web address containing a 
digitally- or computer-manipulated image, digital image, or picture 
shall contain the required statement on every page of a Web site on 
which a visual depiction of an actual human being engaged in actual or 
simulated sexually explicit conduct appears. Such computer site or 
service or Web address may choose to display the required statement in 
a separate window that opens upon the viewer's clicking or mousing-over 
a hypertext link that states, ``18 U.S.C. 2257 [and/or 2257A, as 
appropriate] Record-Keeping Requirements Compliance Statement.''
    (e) For purpose of this section, a digital video disc (DVD) 
containing multiple depictions is a single matter for which the 
statement may be located in a single place covering all depictions on 
the DVD.
* * * * *

0
10. Add Sec.  75.9 to read as follows:


Sec.  75.9  Certification of records.

    (a) In general. The provisions of Sec. Sec.  75.2 through 75.8 
shall not apply to a visual depiction of actual sexually explicit 
conduct constituting lascivious exhibition of the genitals or pubic 
area of a person or to a visual depiction of simulated sexually 
explicit conduct if all of the following requirements are met:
    (1) The visual depiction is intended for commercial distribution;
    (2) The visual depiction is created as a part of a commercial 
enterprise;
    (3) Either--
    (i) The visual depiction is not produced, marketed or made 
available in circumstances such that an ordinary person would conclude 
that the matter contains a visual depiction that is child pornography 
as defined in 18 U.S.C. 2256(8), or,
    (ii) The visual depiction is subject to regulation by the Federal 
Communications Commission acting in its capacity to enforce 18 U.S.C. 
1464 regarding the broadcast of obscene, indecent, or profane 
programming; and
    (4) The producer of the visual depiction certifies to the Attorney 
General that he regularly and in the normal course of business collects 
and maintains individually identifiable information regarding all 
performers, including minor performers, employed by that person, 
pursuant to Federal and State tax, labor, and other laws, labor 
agreements, or otherwise pursuant to industry standards, where such 
information includes the name, address, and date of birth of the 
performer. (A producer of materials depicting sexually explicit conduct 
not covered by the certification regime is not disqualified from using 
the certification regime for materials covered by the certification 
regime.)
    (b) Form of certification. The certification shall take the form of 
a letter addressed to the Attorney General signed either by the chief 
executive officer or another executive officer of the entity making the 
certification, or in the event the entity does not have a chief 
executive officer or other executive officer, the senior manager 
responsible for overseeing the entity's activities.
    (c) Content of certification. The certification shall contain the 
following:
    (1) A statement setting out the basis under 18 U.S.C. 2257A and 
this part under which the certifying entity and any sub-entities, if 
applicable, are permitted to avail themselves of this exemption, and 
basic evidence justifying that basis.

[[Page 77472]]

    (2) The following statement: ``I hereby certify that [name of 
entity] [and all sub-entities listed in this letter] regularly and in 
the normal course of business collect and maintain individually 
identifiable information regarding all performers employed by [name of 
entity]''; and
    (3) If applicable because the visual depictions at issue were 
produced outside the United States, the statement that: ``I hereby 
certify that the foreign producers of the visual depictions produced by 
[name of entity] either collect and maintain the records required by 
sections 2257 and 2257A of title 18 of the U.S. Code, or have certified 
to the Attorney General that they collect and maintain individually 
identifiable information regarding all performers, including minor 
performers, employed by that person, pursuant to tax, labor, and other 
laws, labor agreements, or otherwise pursuant to industry standards, 
where such information includes the name, address, and date of birth of 
the performer, in accordance with 28 CFR part 75; and [name of entity] 
has copies of those records or certifications.'' The producer may 
provide the following statement instead: ``I hereby certify that with 
respect to foreign primary producers who do not either collect and 
maintain the records required by sections 2257 and 2257A of title 18 of 
the U.S. Code, or certify to the Attorney General that they collect and 
maintain individually identifiable information regarding all 
performers, including minor performers, whom they employ pursuant to 
tax, labor, or other laws, labor agreements, or otherwise pursuant to 
industry standards, where such information includes the names, 
addresses, and dates of birth of the performers, in accordance with 28 
CFR part 75, [name of entity] has taken reasonable steps to confirm 
that the performers in any depictions that may potentially constitute 
simulated sexually explicit conduct or lascivious exhibition of the 
genitals or pubic area of any person were not minors at the time the 
depictions were originally produced.'' ``Reasonable steps'' for 
purposes of this statement may include, but are not limited to, a good-
faith review of the visual depictions themselves or a good-faith 
reliance on representations or warranties from a foreign producer.
    (d) Entities covered by each certification. A single certification 
may cover all or some subset of all entities owned by the entity making 
the certification. However, the names of all sub-entities covered must 
be listed in such certification and must be cross-referenced to the 
matter for which the sub-entity served as the producer.
    (e) Timely submission of certification. An initial certification is 
due June 16, 2009. Initial certifications of producers who begin 
production after December 18, 2008, but before June 16, 2009, are due 
on June 16, 2009. Initial certifications of producers who begin 
production after June 16, 2009 are due within 60 days of the start of 
production. A subsequent certification is required only if there are 
material changes in the information the producer certified in the 
initial certification; subsequent certifications are due within 60 days 
of the occurrence of the material change. In any case where a due date 
or last day of a time period falls on a Saturday, Sunday, or federal 
holiday, the due date or last day of a time period is considered to run 
until the next day that is not a Saturday, Sunday, or federal holiday.

    Dated December 9, 2008.
Michael B. Mukasey,
Attorney General.
 [FR Doc. E8-29677 Filed 12-17-08; 8:45 am]
BILLING CODE 4410-14-P