[[Page 29609]]

provisions of the regulations, held in American Library Ass'n v. Reno,
33 F.3d 78 (D.C. Cir.1994), that the statute and its implementing
regulations were content-neutral measures that served the compelling
state interest in protecting children and were therefore
``constitutional as they apply to the vast majority of the materials
affected by them, namely, the commercially produced books, magazines,
films, and videotapes that cater to ``adult'' tastes.'' Id. at 94.
Citing the Tenth Circuit's holding in Sundance Assoc., Inc. v.
Reno, 139 F.3d 804 (10th Cir.1998), several commenters commented that
the rule's application to secondary producers exceeds the Department's
statutory authority. Furthermore, the commenters claimed that
application of the rule to secondary producers as defined by the rule
would have an unconstitutionally burdensome and chilling effect, and
four commenters noted that small businesses would be particularly
burdened with regard to maintaining segregated records, copies of
depictions, and cross-indexed records. In Sundance, the court held that
the statutory definition of producer did not distinguish between
primary and secondary producers and entirely exempted from the record-
keeping requirements those who merely distribute or those whose
activity ``does not involve hiring, contracting for, managing, or
otherwise arranging for the participation of the performers depicted.''
18 U.S.C. 2257(h)(3). In contrast, the D.C. Circuit in American Library
Ass'n v. Reno implicitly accepted that the distinction between primary
and secondary producers was valid. The D.C. Circuit there held that the
requirement that secondary producers maintain records was not a
constitutionally impermissible burden on protected speech, particularly
since secondary producers can comply by maintaining copies of the
records of the primary producers, an option permitted by this rule. In
so holding, the court implicitly considered the distinction between
primary and secondary producers to be legitimate. Consistent with the
D.C. Circuit's holding, which the Department believes reflects the
correct view of the law, the Department declines to adopt these
comments. For the same reason, the Department declines to adopt the
comment of four commenters that the exclusions to the definition of
producer in Sec. 75.1(c)(4)(iii) eliminate the reference to primary
and secondary producers contained in Sec. 75.1(c)(1)-(2).
More specifically, two commenters commented that the expanded
definition of producer to include any person who creates a computer-
generated image is contrary to the ruling in Ashcroft v. Free Speech
Coalition, 535 U.S. 234 (2002), which permits restrictions only on
those who produce depictions of actual persons. The commenters claimed,
too, that the provision is contradictory in that it covers computer-
generated images while limiting its coverage to ``depiction[s] of
actual sexually explicit conduct.'' 28 CFR 75.1(c)(1)-(2). Thus, the
commenters argued, all statutory references to computer-generated
images and depictions not involving possible child abuse to actual
children in their creation should be removed. The Department notes that
the Supreme Court in Ashcroft v. Free Speech Coalition determined that
virtual child pornography could not be constitutionally prohibited
under that statute, which did not require that the material be either
obscene or the product of sexual abuse. The ruling does not, however,
restrict the government's ability to ensure that performers in sexually
explicit depictions are not in fact children. Nevertheless, the
Department has made a slight change to the final rule in response to
these comments by clarifying that the rule applies to those who
digitally manipulate images of actual human beings but not to those who
generate computer images that do not depict actual human beings (e.g.,
cartoons).
Thirty-three commenters commented that the rule included an
improper starting date from which records must be maintained. These
commenters claimed that the Department previously stated, in accordance
with the court's order in American Library Ass'n v. Reno, Civil Action
No. 91-0394 (SSS) (D.D.C. July 28, 1995), that July 3, 1995, was the
effective date for enforcement of section 2257. Nevertheless, the
commenters said, Sec. Sec. 75.2(a), 75.6, and 75.7(a)(1) of the
proposed rule refer to November 1, 1990, and Sec. Sec. 75.2(a)(1) and
(2), 75.6, and 75.7(a)(1) refer to May 26, 1992. The commenters argued
that the effective dates of the regulation should be changed to be
consistent with the Department's representations or, in the
alternative, made purely prospective in order to provide producers a
chance to comply. Further, they argued, no obligations should be
imposed concerning images made prior to the effective date.
Based on the Department's decision not to appeal American Library
Ass'n v. Reno and its representation regarding the effective date of
the regulation to non-parties to American Library Ass'n v. Reno, the
Department has amended the proposed rule and in the final rule makes
July 3, 1995, the effective date of the regulation and imposes no
obligations on producers concerning sexually explicit depictions
manufactured prior to that effective date.
Several commenters commented that the provision permitting seizure
of records is unconstitutionally broad, could lead to prior restraint,
and does not define what specific materials may be seized. The
Department declines to adopt this comment. The Department notes that
the regulatory and inspection scheme outlined in the final rule is a
constitutional exercise of government power and, therefore, the
presence of a law enforcement officer on the premises of the entity
being inspected is authorized. In such a case, evidence of a crime may
be seized by a law enforcement officer under the plain-view exception
to the Fourth Amendment warrant requirement, and the materials seized
do not need to be specifically described in the regulation that
authorized the inspection.
Four commenters objected to the inclusion in the definition of
producer of parent organizations and subsidiaries of producers,
claiming it was beyond the Department's statutory authority, did not
specify which entities must comply with the statute, overrode state
laws on business associations, and violated the principles of Sundance
Assoc., Inc. v. Reno. While not confirming the validity of, or
adopting, the specific objections of the commenters, the Department has
eliminated the inclusion of parent and subsidiary organizations in the
definition of producer.
Citing American Library Ass'n v. Reno, three commenters claimed
that the proposed rule's requirement to ascertain performers' aliases
appeared to impose an obligation on the producer to verify all aliases,
whereas, according to them, American Library Ass'n v. Reno requires
only that the producer obtain the aliases from performers themselves.
Three commentators claimed that the proposed rule's requirement that
information in the label be accurate as of the date on which material
is sold violates American Library Ass'n v. Reno, which required
accuracy on the date the material was produced or reproduced.
The Department, having reviewed American Library Ass'n v. Reno,
agrees with the commenters that minor changes should be made to the
proposed rule for publication as a final rule in order to comply with
the D.C. Circuit's decision. The final rule clarifies that the
producers may rely on the representations regarding aliases that