[Federal Register Volume 68, Number 247 (Wednesday, December 24, 2003)]
[Rules and Regulations]
[Pages 74467-74469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31359]


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FEDERAL RESERVE SYSTEM

12 CFR Part 222

FEDERAL TRADE COMMISSION

16 CFR Part 602

[Regulation V; Docket No. R-1172]
RIN 3084-AA94 Project No. P044804


Effective Dates for the Fair and Accurate Credit Transactions Act 
of 2003

AGENCIES: Board of Governors of the Federal Reserve System (Board) and 
Federal Trade Commission (FTC).

ACTION: Joint interim final rules.

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SUMMARY: The recently enacted Fair and Accurate Credit Transactions Act 
of 2003 (FACT Act or the Act) requires the Board and the FTC (the 
Agencies) jointly to adopt rules establishing the effective dates for 
provisions of the Act that do not contain specific effective dates. The 
Agencies are taking two related actions to comply with this 
requirement. In this action, the Agencies are jointly adopting interim 
final rules that establish December 31, 2003, as the effective date for 
provisions of the Act that determine the relationship between the Fair 
Credit Reporting Act (FCRA) and state laws and provisions that 
authorize rulemakings or other implementing action by various agencies. 
In the second action, published elsewhere in today's Federal Register, 
the Agencies jointly propose rules establishing a schedule of effective 
dates for other provisions of the FACT Act.

DATES: Comments must be submitted on or before January 12, 2004. The 
Agencies' interim final rules are effective on December 31, 2003.

ADDRESSES: Because the Agencies will jointly review all of the comments 
submitted, interested parties may send comments to either of the 
Agencies and need not send comments (or copies) to both of the 
Agencies. Because paper mail in the Washington area and at the Agencies 
is subject to delay, please consider submitting your comments by e-
mail. Commenters are encouraged to use the title ``Interim Final Rules 
for the FACT Act'' to facilitate the organization and distribution of 
comments among the Agencies. Interested parties are invited to submit 
written comments to:
    Board of Governors of the Federal Reserve System: Comments should 
refer to Docket No. R-1172 and may be mailed to Ms. Jennifer J. 
Johnson, Secretary, Board of Governors of the Federal Reserve System, 
20th Street and Constitution Avenue, NW., Washington, DC 20551. Please 
consider submitting your comments by e-mail to 
[email protected], or faxing them to the Office of the 
Secretary at (202) 452-3819 or (202) 452-3102. Members of the public 
may inspect comments in Room MP-500 between 9 a.m. and 5 p.m. on 
weekdays pursuant to section 261.12, except as provided in section 
261.14, of the Board's Rules Regarding Availability of Information, 12 
CFR 261.12 and 261.14.
    Federal Trade Commission: Comments should refer to ``Interim Final 
Rules for the FACT Act, Project No. P044804.'' Comments filed in paper 
form should be mailed or delivered to: Federal Trade Commission/Office 
of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580. Comments filed in electronic form (in ASCII format, 
WordPerfect, or Microsoft Word) should be sent to: [email protected]. 
If the comment contains any material for which confidential treatment 
is requested, it must be filed in paper (rather than electronic) form, 
and the first page of the document must be clearly labeled 
``Confidential.''\1\ Regardless of the form in which they are filed, 
the Commission will consider all timely comments, and will make the 
comments available (with confidential material redacted) for public 
inspection and copying at the Commission's principal office and on the 
Commission Web site at http://www.ftc.gov. As a matter of discretion, 
the Commission makes every effort to remove home contact information 
for individuals from the public comments it receives before placing 
those comments on the FTC Web site.
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must also 
be accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).

FOR FURTHER INFORMATION CONTACT: 

[[Page 74468]]

    Board: Thomas E. Scanlon, Counsel, Legal Division, (202) 452-3594; 
David A. Stein, Counsel, Minh-Duc T. Le, Ky Tran-Trong, Senior 
Attorneys, Krista P. DeLargy, Attorney, Division of Consumer and 
Community Affairs, (202) 452-3667 or (202) 452-2412; for users of 
Telecommunications Device for the Deaf (``TDD'') only, contact (202) 
263-4869.
    FTC: Christopher Keller or Katherine Armstrong, Attorneys, Division 
of Financial Practices, (202) 326-3224.

SUPPLEMENTARY INFORMATION: Congress enacted the FACT Act, which the 
President signed into law on December 4, 2003. Pub. L. 108-159, 117 
Stat. 1952. In general, the Act amends the FCRA to enhance the ability 
of consumers to combat identity theft, to increase the accuracy of 
consumer reports, and to allow consumers to exercise greater control 
regarding the type and amount of marketing solicitations they receive. 
The FACT Act also restricts the use and disclosure of sensitive medical 
information that is contained in a consumer report. To bolster efforts 
to improve financial literacy among consumers, title V of the Act 
(entitled the ``Financial Literacy and Education Improvement Act'') 
creates a new Financial Literacy and Education Commission empowered to 
take appropriate actions to improve the financial literacy and 
education programs, grants, and materials of the Federal government. 
Lastly, to promote increasingly efficient national credit markets, the 
FACT Act establishes uniform national standards in key areas of 
regulation regarding consumer report information.
    The Act includes effective dates for many of its sections that vary 
to take account of the need for rulemaking, implementation efforts by 
industry, and other policy concerns. Section 3 of the FACT Act requires 
the Agencies to prescribe joint regulations establishing an effective 
date for each provision of the Act for which the Act itself does not 
specifically provide an effective date. The FACT Act requires that the 
Agencies jointly adopt final rules establishing the effective dates 
within two months of the date of enactment of the Act. The Act also 
provides that each of these effective dates must be ``as early as 
possible, while allowing a reasonable time for the implementation'' of 
that provision, but in no case later than ten months after the date of 
issuance of the Agencies' joint final rules establishing the effective 
dates for the Act (117 Stat. 1953).
    The Agencies are jointly adopting these interim final rules that 
establish December 31, 2003, as the effective date for section 711 and 
certain other provisions of the Act that establish the relationship 
between the FCRA and state laws, as well as for the provisions that 
authorize rulemaking and other agency action under the FACT Act. In a 
separate notice published in conjunction with this action, the Agencies 
are jointly proposing regulations that establish effective dates for 
the other applicable provisions of the FACT Act. As noted above, the 
Agencies must complete these effective date rules by February 4, 2004.
    The Administrative Procedure Act (APA) (5 U.S.C. 551 et seq.) 
generally requires an agency to publish a notice of a proposed rule and 
afford interested persons an opportunity to participate in the 
rulemaking by providing comments prior to promulgation of the rule. The 
requirement for providing notice of the proposed rule and an 
opportunity for public comment do not apply ``when the agency for good 
cause finds (and incorporates the finding and a brief statement of 
reasons therefore in the rules issued) that notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public 
interest.'' Correspondingly, a rule may not be made effective less than 
thirty days after publication, unless as otherwise provided by the 
agency for good cause found and published with the rule.\2\
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    \2\ 5 U.S.C. 553(b)(3)(B) and (d)(3).
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    The current FCRA contains provisions that preempt state laws in 
seven areas governed by the FCRA. Under section 624(d)(2) of the FCRA, 
these provisions expire on January 1, 2004.\3\ One of the central aims 
of the FACT Act is to eliminate this so-called sunset provision and 
make permanent the current preemption provisions and add others.\4\ In 
these interim final rules, the Agencies are establishing December 31, 
2003, as the effective date for section 711 of the FACT Act, which 
amends section 624(d)(2) of the FCRA, as well as for sections 
151(a)(2), 212(e), 214(c), and 311(b) of the FACT Act, each of which 
similarly determines the relationship of state laws to areas governed 
by the FCRA.
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    \3\ 15 U.S.C. 1681t(d)(2).
    \4\ See, e.g., S. Rep. No. 108-166 (2003) at 10-11, 25.
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    The Agencies believe that there is good cause for adopting these 
rules as interim final rules effective without advance public comment 
or delay. As noted above, the current preemption provisions in the FCRA 
expire on January 1, 2004. Delaying final action on these provisions of 
the FACT Act would undermine the purpose of these provisions and is 
likely to provoke substantial confusion about the applicability of some 
state laws in areas that Congress has determined should be governed by 
uniform nationwide standards. Adopting these rules in final form on an 
interim basis also will have the effect of preserving the current state 
of the law while comment is received. Implementing these interim final 
rules is consistent with the statutory directive to act quickly and to 
``establish effective dates that are as early as possible.''
    Certain provisions of the Act require one or more agencies to 
undertake an action or rulemaking within a specified period of time 
after enactment of the Act. For example, section 213(b) states that the 
Commission's regulations implementing that section ``shall be issued in 
final form not later than 1 year after the date of enactment of this 
Act.'' The Agencies have determined that no joint regulations under 
section 3 of the FACT Act are required to make these provisions 
effective. The Agencies believe that, in these cases, Congress has 
specified the date of enactment as the lawful effective date because 
that is the predicate for mandating that an agency action be performed 
within a specified period of time after the date of enactment.
    There are, however, several sections of the Act that do not specify 
the period for rulemaking or other action. To address this, the 
Agencies' interim final rules establish December 31, 2003, as the 
effective date for each provision of the FACT Act that authorizes an 
agency, without establishing an implementation date, to issue a 
regulation or to take other action to implement the Act or the 
applicable provision of the FCRA, as amended by the FACT Act. The 
Agencies believe that there is good cause for adopting these rules in 
final form on an interim basis without advance public comment or delay. 
Establishing an early effective date for these regulatory provisions 
would allow the agencies to begin immediately to perform their 
responsibilities under the FACT Act. The Agencies note that this 
section of the interim final rules applies only to the provisions of 
the FACT Act without effective dates that relate to an agency's 
authority to issue a regulation or to take other action to implement 
the Act. These interim final rules do not affect the substantive 
provisions of the FACT Act implemented by an agency rule. The 
substantive provisions of the Act become effective as provided in the 
Act, as provided in the Agencies joint effective date rules, or as 
provided by the substantive rules promulgated by the agencies, as 
appropriate.

[[Page 74469]]

    Accordingly, the Agencies find good cause for adopting these rules 
as interim final rules effective on December 31, 2003.
    To allow for public participation and assure that these interim 
rules are appropriate, the Agencies invite comment on the interim final 
rules and on the Agencies' findings. Based on comments received, the 
Agencies may adjust the effective date of a section governed by the 
interim final rules as necessary.

Regulatory Analysis

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320 Appendix A.1), the Agencies have reviewed the interim 
final rules. (The Board has done so under authority delegated to the 
Board by the Office of Management and Budget.) The rules contain no 
collections of information pursuant to the Paperwork Reduction Act.

Communications by Outside Parties to Commissioners and Their Advisors

    Written communications and summaries or transcripts of oral 
communications respecting the merits of this proceeding from any 
outside party to any Commissioner or Commissioner's advisor will be 
placed on the public record. 16 CFR 1.26(b)(5)

Solicitation of Comments on Use of Plain Language

    Section 722(a) of the Gramm-Leach-Bliley Act requires the Federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000.\5\ In light of this requirement, the 
Board has sought to present the provisions of the joint interim final 
rule in a simple and straightforward manner. The Board invites your 
comments on how to make the rule easier to understand. For example:
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    \5\ Pub. L. 106-102, 113 Stat. 1338 (1999), codified at 12 
U.S.C. 4809.
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    [sbull] Have we organized the material to suit your needs? If not, 
how could this material be better organized?
    [sbull] Do the regulations contain technical language or jargon 
that is not clear? If so, which language requires clarification?
    [sbull] Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation easier to 
understand? If so, what changes to the format would make the regulation 
easier to understand?
    [sbull] What else could we do to make the regulation easier to 
understand?

List of Subjects

12 CFR Part 222

    Banks, banking, Holding companies, state member banks.

16 CFR Part 602

    Consumer reports, Consumer reporting agencies, Credit, Trade 
practices.

12 CFR Chapter II--Federal Reserve System

Authority and Issuance

    For the reasons set forth in the preamble, the Board adds a new 12 
CFR part 222 to read as follows:

PART 222--FAIR CREDIT REPORTING (REGULATION V)

    Authority: 15 U.S.C. 1681s; Sec 3, Pub. L. 108-159, 117 Stat. 
1953.

Subpart A--General Provisions


Sec.  222.1  Purpose, scope, and effective dates.

    (a)-(b) [Reserved]
    (c) Effective dates. The applicable provisions of the Fair and 
Accurate Credit Transactions Act of 2003 (FACT Act), Pub. L. 108-159, 
117 Stat. 1952, shall be effective in accordance with the following 
schedule:
    (1) Provisions effective December 31, 2003.
    (i) Sections 151(a)(2), 212(e), 214(c), 311(b), and 711, concerning 
the relation to state laws; and
    (ii) Each of the provisions of the FACT Act that authorizes an 
agency to issue a regulation or to take other action to implement the 
applicable provision of the FACT Act or the applicable provision of the 
Fair Credit Reporting Act, as amended by the FACT Act, but only with 
respect to that agency's authority to propose and adopt the 
implementing regulation or to take such other action.
    (2) [Reserved]

16 CFR Chapter I--Federal Trade Commission

Authority and Issuance

    For the reasons set forth in the preamble, the FTC adds a new 16 
CFR part 602 to read as follows:

PART 602--FAIR CREDIT REPORTING

    Authority: 15 U.S.C. 1681s; Sec. 3, Pub. L. 108-159, 117 Stat. 
1953.

Subpart A--General Provisions


Sec.  602.1  Purpose, scope, and effective dates.




(a)-(b)  [Reserved]

    (c) Effective dates. The applicable provisions of the Fair and 
Accurate Credit Transactions Act of 2003 (FACT Act), Pub. L. 108-159, 
117 Stat. 1952, shall be effective in accordance with the following 
schedule:
    (1) Provisions effective December 31, 2003.
    (i) Sections 151(a)(2), 212(e), 214(c), 311(b), and 711, concerning 
the relation to state laws; and
    (ii) Each of the provisions of the FACT Act that authorizes an 
agency to issue a regulation or to take other action to implement the 
applicable provision of the FACT Act or the applicable provision of the 
Fair Credit Reporting Act, as amended by the FACT Act, but only with 
respect to that agency's authority to propose and adopt the 
implementing regulation or to take such other action.
    (2) [Reserved]

    By order of the Board of Governors of the Federal Reserve 
System, December 16, 2003.
Jennifer J. Johnson,
Secretary of the Board.
    Dated: December 15, 2003.

    By Direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 03-31359 Filed 12-23-03; 8:45 am]
BILLING CODE 6210-01-P, 6750-01-P