[Federal Register Volume 88, Number 11 (Wednesday, January 18, 2023)]
[Proposed Rules]
[Pages 2871-2873]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00854]


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DEPARTMENT OF THE TREASURY

Bureau of Engraving and Printing

31 CFR Part 601


Distinctive Paper and Distinctive Counterfeit Deterrents for 
United States Federal Reserve Notes

AGENCY: Bureau of Engraving and Printing, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This notice of proposed rulemaking would update the 
description of the distinctive paper and distinctive counterfeit 
deterrents used to guard against counterfeit and fraudulently altered 
United States (U.S.) Federal Reserve notes in accordance with the U.S. 
Code. The Department of the Treasury, Bureau of Engraving and Printing 
(BEP) is amending its distinctive paper and distinctive counterfeit 
deterrents regulation to remove obsolete language to align the 
regulation to the current state-of-art and emerging technologies 
generated as a result of BEP's research and development initiatives; 
clarify the agency's authority for adopting distinctive paper and 
distinctive counterfeits deterrents; and announce the adoption of new 
distinctive paper and counterfeit deterrents by the Secretary of the 
Treasury.

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DATES: Comments must be received no later than March 20, 2023.

ADDRESSES: Interested persons are invited to submit comments regarding 
this notice of proposed rulemaking according to the instructions below. 
BEP encourages the early submission of comments. Comments may be 
submitted through one of these methods:
     Electronic Submission: Please submit comments 
electronically through the Federal eRulemaking Portal: https://www.regulations.gov. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt, and enables BEP to make them available to the public. Comments 
submitted electronically through the http://www.regulations.gov website 
can be viewed by other commenters and interested members of the public. 
Comments received, including attachments and other supporting 
materials, will be part of the public record and subject to public 
disclosure. Do not enclose any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure. You should submit only information that you wish 
to make available publicly.
     Postal Mail Submission: Comments may be sent to the Office 
of the Chief Counsel, United States Department of the Treasury, Bureau 
of Engraving and Printing, 14th and C Streets SW, Washington, DC 20228, 
Room 419-A, Attention: Leslie J. Rivera Pag[aacute]n, Amendments to 31 
CFR part 601. Because postal mail may be subject to processing delay, 
it is recommended that comments be submitted electronically.

FOR FURTHER INFORMATION CONTACT: Leslie J. Rivera Pag[aacute]n, 
Attorney-Advisor, Office of Chief Counsel, U.S. Department of the 
Treasury, Bureau of Engraving and Printing, Room 419A, 14th & C Streets 
SW, Washington, DC 20028, phone at (202) 874-2500 or fax (202) 874-
2951.

SUPPLEMENTARY INFORMATION:

I. Background

    The BEP regulation appearing at 31 CFR part 601 relates to the 
distinctive paper and distinctive counterfeit deterrents used to guard 
against counterfeit and fraudulently altered U.S. Federal Reserve 
notes. The last amendment to 31 CFR part 601 was on March 18, 1996. 
Since then, BEP has engaged in research and development resulting in 
modification of its distinctive paper and distinctive counterfeit 
deterrents, thus necessitating revision of the entire regulation.
    The U.S. Congress, which has power under the U.S. Constitution to 
coin money and regulate the value thereof, has delegated to the 
Secretary of the Treasury (``Secretary'') exclusive authority to 
determine the form and tenor of U.S. Federal Reserve notes. 
Accordingly, the Secretary may adopt and examine plates, dies, bed 
pieces, and other materials used to print U.S. Federal Reserve notes 
and issue regulations relating to such examination. The Secretary may 
also prescribe regulations that the Secretary considers best calculated 
to promote the public convenience and security, and to protect the U.S. 
Government and individuals from fraud and loss that apply to anyone who 
may receive on behalf of the U.S. Government, Treasury notes, United 
States notes, or other Government securities. Additionally, the 
Secretary has the authority to adopt any distinctive paper and 
distinctive counterfeit deterrents for U.S. Federal Reserve notes in 
the best manner to guard against counterfeits and fraudulent 
alterations.
    The BEP mission is to develop and manufacture U.S. Federal Reserve 
notes that are trusted worldwide. The Secretary has delegated specific 
authority and responsibilities related to the production of U.S. 
Federal Reserve notes to the Director of BEP only. (Treasury Order 101-
07, Delegation to the Director, Bureau of Engraving and Printing, for 
the Production of Currency Notes to Meet the Demands of the Federal 
Reserve Banks, January 4, 2021.) BEP's Director may redelegate the 
authority and responsibility to a BEP Associate Director only.
    This proposed rule would update BEP's 1996 (61 FR 10895) regulation 
concerning the distinctive paper and distinctive counterfeit deterrents 
BEP intends to use to produce the next generations of U.S. Federal 
Reserve notes to guard against counterfeits and fraudulent alterations. 
The proposed revision would clarify the description of the distinctive 
paper and distinctive counterfeit deterrents separately for U.S. 
Federal Reserve notes, remove obsolete language, align the regulation 
to the current state-of-art and emerging technologies generated as a 
result of BEP's research and development initiatives, clarify the 
agency's authority for adopting distinctive paper and distinctive 
counterfeits deterrents, and announce the adoption of new distinctive 
paper and counterfeit deterrents by the Secretary.

II. Procedural Analyses

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) 
requires agencies to prepare an initial regulatory flexibility analysis 
(IRFA) to determine the economic impact of the rule on small entities. 
A small entity is defined as either a small business, a small 
organization, or a small governmental jurisdiction; an individual is 
not a small entity. Section 605(b) of the RFA allows an agency to 
prepare a certification instead of an IRFA if the rule does not have a 
significant economic impact on a substantial number of small entities. 
Pursuant to 5 U.S.C. 605(b), it is hereby certified that this 
regulation will not have a significant economic impact on a substantial 
number of small entities. The proposed rule is limited to updating the 
description of the distinctive paper and distinctive counterfeit 
deterrents used to guard against counterfeit and fraudulently altered 
United States (``U.S.'') Federal Reserve notes and other obligations 
and securities in accordance with the U.S. Code. Accordingly, if 
finalized, this proposed rule will have no direct impact on small 
entities. Notwithstanding this certification, BEP invites comments on 
this proposed rule's impact, if any, on small entities.

B. Regulatory Planning and Review (Executive Orders 12866 and 13563)

    Executive Orders 13563 and 12866 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
BEP has determined this proposed rule relates to the agency 
organization and management, and therefore, Executive Orders 13563 and 
12866 do not apply to this proposed rule. This proposed rule is not a 
``significant regulatory action'' under Executive Order 12866.

C. Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that agencies assess anticipated costs and benefits and take certain 
other actions before issuing a rule that includes any federal mandate 
that may result in expenditures in any one year by a state, local, or 
tribal government, in

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the aggregate, or by the private sector, of $100 million in 1995 
dollars, updated annually for inflation. BEP certifies that no actions 
were deemed necessary under the Unfunded Mandates Reform Act of 1995. 
Furthermore, these proposed regulations 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 
they will not significantly or uniquely affect small governments.

D. Federalism

    Executive Order 13132 (titled Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial, direct compliance costs on state and local 
governments, and is not required by statute, or preempts state law 
unless the agency meets the consultation and funding requirements of 
section 6 of the Executive Order. This proposed rule has been reviewed 
under Executive Order 13132 and would not have federalism implications 
and or impose substantial direct effects on States, on the relationship 
between the National Government and the States, or the distribution of 
power and responsibilities among the various levels of government 
within the meaning of the Executive Order. Therefore, in accordance 
with Executive Order 13132, it is determined that this proposed rule 
does not have sufficient federalism implications to warrant the 
preparation of a federalism summary impact statement.

E. Paperwork Reduction Act (PRA) Notices

    The Paperwork Reduction Act does not apply because this proposed 
rule would not impose information collection requirements that require 
the approval of the Office of Management and Budget under 44 U.S.C. 
3501, et seq.

List of Subjects in 31 CFR Part 601

    Currency, Securities, Printing.

    For the reasons stated in the preamble, BEP proposes to revise 31 
CFR part 601 as follows:

PART 601--DISTINCTIVE PAPER AND DISTINCTIVE COUNTERFEIT DETERRENTS 
FOR UNITED STATES FEDERAL RESERVE NOTES

Sec.
601.1 Notice and scope.
601.2 Distinctiveness requirement.
601.3 Distinctive paper.
601.4 Distinctive counterfeit deterrents.
601.5 Penalty for unauthorized control or possession.

    Authority:  5 U.S.C. 301; 12 U.S.C. 418, 421; 18 U.S.C. 474A; 31 
U.S.C. 321.


Sec.  601.1  Notice and scope.

    The regulation in this part governs the distinctive paper and 
distinctive counterfeit deterrents adopted by the Secretary of the 
Treasury for United States Federal Reserve notes, which are subject to 
18 U.S.C. 474A. The Director of Bureau of Engraving and Printing, by 
delegated authority, hereby gives notice of the distinctive paper and 
distinctive counterfeit deterrents adopted by the Secretary of the 
Treasury.


Sec.  601.2  Distinctiveness requirement.

    (a) The Secretary of the Treasury has adopted distinctive paper and 
distinctive counterfeit deterrents:
    (1) In which the United States has an exclusive property interest; 
or
    (2) That are not otherwise in commercial use or the public domain 
and are necessary for preventing the counterfeiting of United States 
Federal Reserve notes.
    (b) The distinctive paper and counterfeit deterrents are used in 
United States Federal Reserve notes.


Sec.  601.3  Distinctive paper.

    The distinctive paper is a cream-white currency note paper with 
fibers, colored red and blue, evenly distributed throughout the 
currency note paper. The distinctive paper shall contain distinctive 
counterfeit deterrents in the currency note paper denominations 
prescribed by the Secretary of the Treasury.


Sec.  601.4  Distinctive counterfeit deterrents.

    The distinctive counterfeit deterrents that may be used in the 
denominations of United States Federal Reserve notes as prescribed by 
the Secretary of the Treasury are:
    (a) Security threads containing graphics consisting of the 
designation ``USA'' and the denomination of the currency note, 
expressed in alphabetic or numeric characters.
    (b) Optically variable inks with material characteristics.
    (c) Non-visual characteristic inks with material characteristics.
    (d) Optically variable thread (three-dimensional (3-D) security 
ribbon and micro-optic stripe) visible in front or back of the currency 
note.
    (e) Non-visual characteristic features with material 
characteristics.


Sec.  601.5  Penalty for Unauthorized Control or Possession.

    (a) Control or possession of distinctive paper and/or distinctive 
counterfeit deterrents adopted in Sec. Sec.  601.3 and 601.4 require 
authorization by the Secretary of the Treasury.
    (b) The penalty for unauthorized control and/or possession of 
distinctive paper and/or distinctive counterfeit deterrents adopted in 
Sec. Sec.  601.3 and 601.4 is found at 18 U.S.C. 474A.

Leonard R. Olijar,
Director.
[FR Doc. 2023-00854 Filed 1-17-23; 8:45 am]
BILLING CODE 4840-01-P