[Federal Register Volume 68, Number 119 (Friday, June 20, 2003)]
[Proposed Rules]
[Pages 36955-36957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15638]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Office of the Secretary of the Treasury

Fiscal Service

31 CFR Parts 1 and 323


Privacy Act of 1974; Proposed Implementation

AGENCY: Bureau of the Public Debt, Treasury.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: With the concurrence of the Department of the Treasury 
(Department), the Bureau of the Public Debt (Public Debt) issues a 
proposed rulemaking to amend its regulations to exempt a system of 
records from certain provisions of the Privacy Act. Lastly, we are 
amending regulations to clarify when personal privacy interests may be 
protected upon the death of a securities holder.

DATES: Comments must be received no later than July 21, 2003.

ADDRESSES: Send any comments to the Disclosure Officer, Administrative 
Resource Center, Bureau of the Public Debt, Department of the Treasury, 
200 Third Street, Room 211, Parkersburg, WV 26101-5312. Copies of all 
written comments will be available for public inspection and copying at 
the Department of the Treasury Library, Room 1428, Main Treasury 
Building, Washington, DC 20220. Before visiting the library, you must 
call 202-622-0990 for an appointment. Also, you can download comments 
at the following World Wide Web address: ``http://www.publicdebt.treas.gov''.

FOR FURTHER INFORMATION CONTACT: For information about Public Debt's 
anti-money laundering and fraud suppression program, contact the Fraud 
Inquiry Line at (304) 480-8555. The phone line is administered by the 
Office of the Chief Counsel, Bureau of the Public Debt. For information 
about this document, contact the Office of the Chief Counsel, Bureau of 
the Public Debt, at (304) 480-8692.

SUPPLEMENTARY INFORMATION: Under the Privacy Act of 1974, 5 U.S.C. 
552a, as amended, a Federal agency is required, among other things, to: 
(1) Maintain only information about an individual that is relevant and 
necessary to accomplish an authorized purpose; (2) Notify an individual 
whether information about him or her is maintained in a system of 
records; (3) Provide an individual with access to the records 
containing information about him or her, including an accounting of 
disclosures made of that information; (4) Permit an individual to 
request amendment of records about him or her; and (5) Describe in 
system notices the sources of information maintained about individuals 
and the procedures under which notice, access and amendment rights may 
be exercised. Under certain circumstances, however, the head of a 
Federal agency may issue rules to exempt a system of records.
    Public Debt is publishing separately in the Federal Register a 
notice establishing a new system of records, Treasury/BPD.009--U.S. 
Treasury Securities Fraud Information System. In that regard, Public 
Debt proposes to exempt the new system from certain Privacy Act 
requirements. The head of an agency may promulgate rules to exempt a 
system of records from certain provisions under 5 U.S.C. 552a(k)(2) if 
the system of records is ``investigatory material compiled for law 
enforcement purposes, other than material within the scope of 
subsection (j)(2) of this section.''
    Accordingly, pursuant to the authority contained in section 31 CFR 
1.23(c)(2), Public Debt proposes to exempt the system from certain 
provisions of the Privacy Act pursuant to 5 U.S.C. 552a(k)(2).
    This system will be exempt from 5 U.S.C. 552a(c)(3) (Accounting of 
certain disclosures available to the individual), (d)(1)-(4) (Access to 
records), (e)(1) (Maintenance of information to accomplish purposes 
authorized by statute or executive order only), (e)(4)(G) (Publication 
of procedures for notification), (e)(4)(H) (Publication of procedures 
for access and contest), (e)(4)(I) (Publication of sources of records), 
and (f) (Rules for notification, access and contest) to the extent that 
information in the system is subject to exemption pursuant to 5 U.S.C. 
552a(k)(2) as material compiled for law enforcement purposes.
    The reasons for exemptions under 5 U.S.C. 552a(k)(2) are as 
follows:
    (1) 5 U.S.C. 552a(c)(3) requires an agency to make accountings of 
disclosures of a record available to the individual named in the record 
upon his or her request. The accountings must state the date, nature, 
and purpose of each disclosure of the record and the name and address 
of the recipient. Application of this provision would impair the 
ability of Public Debt and of law enforcement agencies to make 
effective use of information maintained by Public Debt. Access to such 
knowledge would impair the ability of Public Debt and law enforcement 
to carry out their mission, since individuals could:
    (a) Take steps to avoid detection;
    (b) Inform associates that an investigation is in process;
    (c) Learn the nature of the investigation;
    (d) Learn whether they are only suspects or identified as law 
violators;
    (e) Begin, continue, or resume illegal conduct upon learning that 
they are not identified in the system of records; or
    (f) Destroy evidence needed to prove the violation.
    (2)(a) 5 U.S.C. 552a(d)(1), (e)(4)(H) and (f)(2), (3) and (5) grant 
individuals access to records pertaining to them. The application of 
these provisions to the system of records would compromise Public 
Debt's ability to utilize and provide useful tactical and strategic 
information to law enforcement agencies.
    (b) Permitting access to records contained in the system of records 
would provide individuals with information concerning the nature of any 
current investigations and would enable them to avoid detection or 
apprehension by:
    (i) Discovering the facts that would form the basis for their 
detection or apprehension;
    (ii) Enabling them to destroy or alter evidence of illegal conduct 
that would form the basis for their detection or apprehension;
    (iii) Using knowledge that investigators had reason to believe that 
a violation of law was about to be committed, to delay the commission 
of the violation or commit it at a location that might not be under 
surveillance;
    (c) Permitting access to either on-going or closed investigative 
files would also reveal investigative techniques and

[[Page 36956]]

procedures, the knowledge of which could enable individuals planning 
illegal acts to structure their operations so as to avoid detection or 
apprehension;
    (d) Permitting access to investigative files and records could, 
moreover, disclose the identity of confidential sources and informers 
and the nature of the information supplied and thereby endanger the 
physical safety of those sources by exposing them to possible reprisals 
for having provided the information. Confidential sources and informers 
might refuse to provide investigators with valuable information unless 
they believed that their identities would not be revealed through 
disclosure of their names or the nature of the information they 
supplied. Loss of access to such sources would seriously impair law 
enforcement and Public Debt's ability to carry out their mandate.
    (e) Furthermore, providing access to records contained in the 
system of records could reveal the identities of undercover law 
enforcement officers or other persons who compiled information 
regarding the individual's illegal activities and thereby endanger the 
physical safety of those officers, persons, or their families by 
exposing them to possible reprisals.
    (f) By compromising the law enforcement value of the system of 
records for the reasons outlined in paragraphs (b) through (e) of this 
section, permitting access in keeping with these provisions would 
discourage other law enforcement and regulatory agencies, foreign and 
domestic, from freely sharing information with Public Debt and thus 
would restrict Public Debt's access to information necessary to 
accomplish its mission most effectively.
    (g) Finally, the dissemination of certain information that Public 
Debt may maintain in the system of records is restricted by law. 
Disclosure of the record to the subject pursuant to subsections (c)(3) 
or (d)(1)-(4) of the Privacy Act would violate the non-notification 
provision of the Bank Secrecy Act, 31 U.S.C. 5318(g)(2), under which 
there is a prohibition from notifying a transaction participant that a 
suspicious transaction report has been made. In addition, the access 
provisions of subsections (c)(3) and (d) of the Privacy Act would alert 
individuals that they have been identified as suspects or possible 
subjects of investigation and thus seriously hinder the law enforcement 
purposes underlying the suspicious transaction reports.
    (3) 5 U.S.C. 552a(d)(2), (3), and (4), (e)(4)(H), and (f)(4) permit 
an individual to request amendment of a record pertaining to him or her 
and require the agency either to amend the record, or to note the 
disputed portion of the record and to provide a copy of the 
individual's statement of disagreement with the agency's refusal to 
amend a record to persons or other agencies to whom the record is 
thereafter disclosed. Since these provisions depend on the individual's 
having access to his or her records, and since these rules exempt the 
system of records from the provisions of 5 U.S.C. 552a relating to 
access to records, for the reasons set out in subparagraphs (b) through 
(g) of paragraph (2), above, these provisions should not apply to the 
system of records.
    (4)(a) 5 U.S.C. 552a(e)(1) requires an agency to maintain in its 
records only such information about an individual as is relevant and 
necessary to accomplish a purpose of the agency required to be 
accomplished by statute or executive order. The term ``maintain'' as 
defined in 5 U.S.C. 552a(a)(3), includes ``collect'' and 
``disseminate.'' The application of this provision to the system of 
records could impair Public Debt's ability to collect, utilize, and 
disseminate valuable information to law enforcement.
    (b) At the time that Public Debt collects information, it often 
lacks sufficient time to determine whether the information is relevant 
and necessary to accomplish a Public Debt purpose.
    (c) In many cases, especially in the early stages of investigation, 
it may be impossible immediately to determine whether information 
collected is relevant and necessary, and information that initially 
appears irrelevant and unnecessary often may, upon further evaluation 
or upon collation with information developed subsequently, prove 
particularly relevant to a law enforcement program.
    (d) Not all violations of law discovered by Public Debt employees 
fall within the jurisdiction of Public Debt. Public Debt will have to 
disclose such violations to other law enforcement agencies, including 
State, local, and foreign agencies that have jurisdiction over the 
offenses to which the information relates.
    (5) 5 U.S.C. 552a(e)(4)(I) requires an agency to publish a general 
notice listing the categories of sources for information contained in a 
system of records. The application of this provision to the system of 
records could compromise Public Debt's ability to provide useful 
information to law enforcement agencies, since revealing sources for 
the information could:
    (a) Disclose investigative techniques and procedures;
    (b) Result in threats or reprisals against informers by the 
subjects of an investigation; and
    (c) Cause informers to refuse to give full information to 
investigators for fear of having their identities as sources disclosed.
    In an unrelated change, we are clarifying the privacy interests 
afforded to investors upon the death of a securities holder. Public 
Debt has protected the privacy interests of securities holders by 
regulation long before the passage of the Privacy Act of 1974. We are 
amending part 323 to comport with exemption 6 of the Freedom of 
Information Act which permits us to withhold all information about 
individuals in ``personnel and medical files and similar files'' when 
the disclosure of such information ``would constitute a clearly 
unwarranted invasion of personal privacy.'' Although the right to 
privacy of a deceased securities holder extinguishes upon death, the 
exemption protects the deceased person's family-related privacy 
interests in certain cases.
    The Regulatory Flexibility Act (RFA) requires Federal agencies 
either to certify that a proposed rule would not, if adopted in final 
form, have a significant impact on a substantial number of small 
entities or to prepare an initial regulatory flexibility analysis of 
the proposal and publish the analysis for comment (5 U.S.C. 601 et 
seq.). This regulation will exempt a new system of records from the 
Privacy Act. Because this regulation affects only internal agency 
administration, this exemption is not expected to generate any costs. 
Therefore, Public Debt and the Department certify that the proposed 
rule, if adopted in final form, will not have a significant economic 
impact on a substantial number of small entities.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), Public Debt and the Department have determined that this 
proposed rule would not impose new recordkeeping, application, 
reporting, or other types of information collection requirements.
    The regulation will not have a substantial direct effect 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, it is determined that this 
regulation does not have federalism implications under Executive Order 
13132.
    In accordance with Executive Order 12866, it has been determined 
that this final rule is not a ``significant regulatory

[[Page 36957]]

action'' and, therefore, does not require a Regulatory Impact Analysis.

List of Subjects

31 CFR Part 1

    Privacy.

31 CFR Part 323

    Freedom of Information, Privacy.

    Accordingly, for the reasons stated in the preamble, 31 CFR part 1, 
is amended as follows:
    1. The authority citation for part 1 continues to read as follows:

    Authority: 5 U.S.C. 301 and 31 U.S.C. 321. Subpart A also issued 
under 5 U.S.C. 552, as amended. Subpart C also issued under 5 U.S.C. 
552a.

PART 1--[AMENDED]

Subpart C--Privacy Act

    2. In Sec.  1.36 of Subpart C, paragraph (g)(1)(x) is amended by 
adding the following new table below the heading BUREAU OF THE PUBLIC 
DEBT:

------------------------------------------------------------------------
               Number                            System name
------------------------------------------------------------------------
BPD.009............................  U.S. Treasury Securities Fraud
                                      Information System.
------------------------------------------------------------------------

PART 323--[AMENDED]

    3. The authority citation for part 323 continues to read as 
follows:

    Authority: 80 Stat. 379; sec. 3., 60 Stat. 238, as amended; 5 
U.S.C. 301, 552.

    4. Revise Sec.  323.2(b) to read as follows:


Sec.  323.2  Rules Governing Availability of Information.

* * * * *
    (b) Limitations on the availability of records relating to 
securities. Records relating to the purchase, ownership of, and 
transactions in Treasury securities or other securities handled by the 
Bureau of the Public Debt for government agencies or wholly or 
partially Government-owned corporations will ordinarily be disclosed 
only to the owners of such securities, their executors, administrators 
or other legal representatives or to their survivors or to 
investigative and certain other agencies of the Federal and State 
governments, to trustees in bankruptcy, receivers of insolvents' 
estates or where proper order has been entered requesting disclosure of 
information to Federal and State courts. These records are held 
confidential because they relate to private financial affairs of the 
owners under this Part. In addition, the information falls within the 
category of ``personnel and medical files and similar files the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy'' under the Freedom of Information Act, 5 U.S.C. 
552(b)(6). Exemption (b)(6) protects the privacy of living persons and 
close survivors of a deceased person identified in a record. Privacy 
interests, in the sense of the right to control, use, or disclose 
information about oneself, cease at death. However, the exemption 
protects the deceased person's family-related privacy interests that 
survive death where disclosure would cause embarrassment, pain, grief, 
or disrupt the peace of mind, of the surviving family. The Bureau of 
the Public Debt will determine whether disclosure of the records is in 
the public interest by balancing the surviving family members' privacy 
interest against the public's right to know the information.

    Dated: June 3, 2003.
W. Earl Wright, Jr.,
Chief Management and Administrative Programs Officer.
[FR Doc. 03-15638 Filed 6-19-03; 8:45 am]
BILLING CODE 4810-39-P