Short title

This Act may be cited as the

Coin Modernization and Taxpayer Savings Act of 2008

Findings

The Congress finds as follows: (1)International demand along with market speculation for commodity metals has, over the past several years, increased the cost of producing circulating coins in the United States. (2)In a July 30, 2007, letter to the Congress, the Secretary of the Treasury, with support of the Administration’s Office of Management and Budget, requested that legislation be put forward to authorize the Secretary of the Treasury to make changes to the composition of circulating coins. (3)The United States Mint has studied alternative metals for use in circulating coins, as noticed in its 2004 annual report. (4)In 1943, the United States Mint produced zinc-coated steel pennies in response to war-time demands for copper. (5)The United States Mint gained further experience changing the metal content of pennies in 1982, when it began producing copper-coated zinc pennies as a result of rising copper prices. (6)The Royal Canadian Mint has produced for several years a copper-coated steel 1-cent coin that is similar to the United States penny at a significantly lower cost than the cost to produce the United States penny. (7)Given the current cost to make a penny and volume of pennies minted, by simply reducing penny production costs to face value, the United States will save more than $500,000,000 in the next 10 years alone. (8)Reducing the cost to produce a nickel to face value will save the United States an additional $60,000,000 per year. (9)Commodity metal prices are often cyclical in nature, and can be inflated by speculation, so it is important that a solid trend in the rising price of a commodity metal be established before any change in the metal content of a coin is made.

Immediate reduction in the cost of producing 1-cent coins through the use of steel pennies

Subsection (c) of section 5112 of title 31, United States Code, is amended to read as follows:

(c)

Composition of 1-cent and 5-cent coins

(1)

1-cent coin

(A)

In general

Subject to paragraph (2), beginning 270 days after the date of the enactment of the Coin Modernization and Taxpayer Savings Act of 2008, the 1-cent coin shall— (i)be produced primarily of steel; and (ii)meet such other specifications as the Secretary may determine to be appropriate, including any change in the weight from that specified in subsection (a)(6). (B)

Treatment

The 1-cent coin shall be treated to impart a copper color to the appearance of the coins so that the appearance is similar to 1-cent coins produced of a copper-zinc alloy. (C)

Exception for Lincoln bicentennial numismatic pennies

No provision of this paragraph shall apply with respect to 1-cent coins described in section 304 of the Presidential $1 Coin Act of 2005 that are issued for numismatic purposes. (2)

Alternative 1-cent coin composition

(A)

In general

If, before the end of the 90-day period beginning on the date of the enactment of the Coin Modernization and Taxpayer Savings Act of 2008, the Secretary determines that, with the addition of any other element to any alloy of zinc and copper of which 1-cent coins could have been composed as of the day before such date of enactment, there is a way— (i)to produce 1-cent coins of the same diameter, general composition, and general weight as 1-cent coins produced in accordance with this subsection as of the day before such date of enactment; and (ii)to achieve the goals of paragraph (1) by reducing the unit cost to produce the 1-cent coin to less than 1 cent while retaining such coin’s ease of use and ensuring ease of co-circulation with 1-cent coins of the diameter and weight already circulating as of such date of enactment for ordinary commerce,

the Secretary may add any such element and continue production of 1-cent coins of the same diameter, general composition, and general weight as 1-cent coins produced in accordance with this subsection as of the day before such date of enactment instead of complying with paragraph (1).

(B)

Effective period

This paragraph shall only apply if the change to the new composition and the subsequent drop in the production cost of the 1-cent coin referred to in subparagraph (A) can be achieved before the end of the 270-day period referred to in paragraph (1). (C)

Report to the congress

Any determination and action by the Secretary under subparagraph (A) shall be promptly reported to the Congress.

Authority to change metallic content of 5-cent coins to less costly alternative

(a)

In general

Subsection (c) of section 5112 of title 31, United States Code, (as amended by section 3) is amended by adding at the end the following new paragraph:

(3)

5-cent coin

(A)

In general

After the end of the 2-year period beginning on the date of the enactment of the Coin Modernization and Taxpayer Savings Act of 2008, the Secretary shall produce no 5-cent coin that is not primarily made of steel with a coating of nickel, that can co-circulate with the existing supply of 5-cent coins and work interchangeably in coin handling machines, except that— (i)the Secretary shall make no change to the content of the existing 5-cent coin if at that point the unit cost of production of such coins is lower than the face value of the coin; and (ii)if the report issued by the Secretary pursuant to section 6 indicates that a different metallic content of circulating 5-cent coins is both functional and interchangeable, and more economical to produce in both the short and long term, the Secretary shall propose such content to the Congress in the form of a legislative recommendation. (B)

Factors to be considered

In prescribing the weight and the composition of the 5-cent coin, the Secretary shall consider— (i)factors relevant to the potential impact of any revisions to the weight and composition of the material on the current coin suppliers; (ii)factors relevant to the acceptability of new coinage materials, including the effect on vending machines and commercial coin processing equipment and making certain, to the greatest extent practicable, that any new coins work without interruption in existing coin acceptance equipment without modification; and (iii)such other factors that the Secretary, in consultation with merchants who would be affected by any change in the weight and composition of the 5-cent coin, vending machine and other coin acceptor manufacturers, vending machine owners and operators, transit officials, municipal parking officials, depository institutions, coin and currency handlers, armored-car operators, car wash operators, and American-owned manufacturers of commercial coin processing equipment, considers to be appropriate and in the public interest, after notice and opportunity for comment. (C)

Comment and selection process

In making any determination with respect to any change in the weight and composition of the 5-cent coin, the Secretary shall enter into a formal rulemaking process that includes a hearing on a record in addition to the publication of notice and opportunity for comment.

(b)

Technical and conforming amendment

Section 5112(a)(5) of title 31, United States Code, is amended by striking and weighs 5 grams.

Authority to conduct research and development on all circulating coins

To accomplish the goals of this Act, the Secretary may conduct any appropriate testing within or without the Department of the Treasury, and may solicit input from or otherwise work in conjunction with entities within or without the Federal government including independent research facilities or current or potential suppliers of the material used in volume production of circulating coins, to complete the report referred to in this Act and to develop, evaluate or begin the use of new metallic material for such production.

Biennial report to congress on current status of coin production costs and analysis of alternative content required

(a)

Biennial report required

Before the end of the 270-day period beginning on enactment of this Act, and at 2-year intervals following the initial report, the Secretary of the Treasury shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate analyzing production costs for each circulating coin, cost trends, and possible new metallic materials or technologies for the production of circulating coins. (b)

Detailed recommendations

The reports required under this section shall contain detailed recommendations for any appropriate changes to the metallic content of circulating coins in such a form that the recommendations could be enacted into law as appropriate. (c)

Improved production efficiency

The reports required under this section shall include recommendations for changes in the methods of producing coins at the United States Mint that would further reduce the costs to produce circulating coins, and include notes on any legislative changes that might be necessary to achieve such goals. (d)

Minimizing conversion costs

The reports required under this section shall— (1)include no recommendation for new specifications for producing a circulating coin that would require significant change to coin-accepting and coin-handling equipment to accommodate changes to all circulating coins simultaneously, except for any potential change to the 5-cent coin as authorized under section 4; and (2)to the greatest extent possible, recommend specifications that, while consistent with other portions of this section and the amendments made by this Act, require no changes to coin-accepting or coin-handling equipment whatsoever to accommodate both coins produced with the new specifications and coins produced as of July 31, 2007. (e)

Fraud prevention

The reports required under this section shall make no recommendation for a specification change that would facilitate or allow the use of a coin with a lesser value produced by another country, or the use of any token or other easily or regularly produced metal device of minimal value, in the place of a circulating coin produced by the Secretary.