[The Regulatory Plan and Unified Agenda of Federal Regulatory and Deregulatory Actions]
[Department of the Treasury Regulatory Plan]
[From the U.S. Government Printing Office, www.gpo.gov]

Federal Register / Vol. 61, No. 231 / Friday, November 29, 1996 / The
                            Regulatory Plan

[[Page 62128]]

DEPARTMENT OF THE TREASURY (TREAS)
Statement of Regulatory Priorities
The primary missions of the Department of the Treasury are: Protecting 
and collecting the revenue under the Internal Revenue Code and customs 
laws; supervising national banks and thrift institutions; managing the 
Community Development Financial Institutions Program and the Bank 
Enterprise Award Program; managing the fiscal operations of the Federal 
Government; enforcing laws relating to counterfeiting, Federal 
Government securities, firearms and explosives, money laundering, 
foreign commerce in goods and financial instruments, and smuggling and 
trafficking in contraband; protecting the President, Vice President, 
and certain foreign diplomatic personnel; training Federal, State, and 
local law enforcement officers; and producing coins and currency.
Consistent with these missions, most regulations of the Department and 
its constituent bureaus are promulgated to interpret and implement the 
laws as enacted by the Congress and signed by the President. Unless 
circumstances require otherwise, it is the policy of the Department to 
issue a notice of proposed rulemaking (NPRM) and carefully consider 
public comments before adopting final regulations. Also, in particular 
cases, the Department invites interested parties to submit views on 
rulemaking projects while the NPRM is being developed and to hold 
public hearings to discuss a proposed rule.
To the extent permitted by law, it is the policy of the Department to 
adhere to the regulatory philosophy and principles set forth in 
Executive Order 12866 and to develop regulations that maximize 
aggregate net benefits to society while minimizing the economic and 
paperwork burdens imposed on persons and businesses subject to those 
regulations.
Pursuant to the President's regulatory reform initiative, each of the 
Department's regulatory offices and bureaus conducted a thorough page-
by-page review of all of its regulations. As a result of this process, 
which included consultation with regulated entities, the Department 
identified over 2,200 pages of its non-tax regulations in the Code of 
Federal Regulations (CFR) that will be streamlined or eliminated. In 
addition, the Internal Revenue Service identified over 1,200 pages of 
CFR regulations and other ruling documents that will be streamlined or 
eliminated. During fiscal year 1996, the Department accorded priority 
to implementing as many of these changes as possible, taking into 
consideration its ongoing regulatory responsibility to issue 
regulations necessary to implement or interpret the laws as enacted by 
the Congress. As a result of these efforts, the Department initiated or 
ocmpleted rulemakings or other actions to eliminate or streamline over 
3,000 pages of its regulations and other ruling documents. The 
Department will aggressively continue this project during fiscal year 
1997.
Internal Revenue Service
The Internal Revenue Service (IRS), working with the Office of the 
Assistant Secretary (Tax Policy), promulgates regulations that 
interpret and implement the Internal Revenue Code and related tax 
statutes. In developing these regulations, every effort is made to 
carry out the tax policy determined by Congress in a fair, impartial, 
and reasonable manner, taking into account the intent of Congress, the 
realities of relevant transactions, the need for the Government to 
administer the rules and monitor compliance, and the overall integrity 
of the Federal tax system. The goal is to make the regulations 
practical and user-friendly by providing guidance that is as clear and 
simple as possible.
Most IRS regulations interpret tax statutes to resolve ambiguities or 
fill gaps in the tax statutes. This includes interpreting particular 
words, applying rules to broad classes of circumstances, and resolving 
apparent and potential conflicts between various statutory provisions.
During fiscal year 1997, the IRS will accord priority to the following 
regulations:
 Classification of Business Organizations. The existing 
            regulations for classifying business organizations as 
            associations (which are taxable as corporations) or as 
            partnerships are based on the historical differences under 
            local law between partnerships and corporations. However, 
            many States have revised their statutes to provide that 
            partnerships and other unincorporated organizations may 
            possess characteristics that traditionally have been 
            associated with corporations. In light of these and other 
            developments, in 1996, Treasury and the IRS proposed 
            regulations that would replace the increasingly formalistic 
            rules for classifying business organizations under the 
            current regulations. The proposed rules provide a much 
            simpler approach that generally is elective. To further 
            simplify this area, the proposed regulations provide 
            similar rules for organizations that have a single owner. 
            Final regulations are expected to be issued in fiscal year 
            1997.
 Tax Treatment of Inflation-Indexed Securities. A priority of 
            the Bureau of the Public Debt for fiscal year 1997 is the 
            issuance of regulations governing inflation-indexed 
            securities (see discussion below). The IRS will issue 
            regulations to provide guidance on the Federal income tax 
            treatment of inflation-indexed securities and other debt 
            instruments with similar terms.
 Withholding Tax Regulations Under Section 1441. Section 1441 
            of the Internal Revenue Code requires withholding of income 
            tax on most payments of U.S. source income made to foreign 
            persons. The IRS recently proposed regulations under 
            section 1441 to streamline and modernize the existing 
            regulations by coordinating the domestic reporting and 
            backup withholding provisions and the section 1441 
            withholding requirements. Special provisions for omnibus 
            accounts also will be provided. These proposed regulations 
            are expected to be finalized in fiscal year 1997.
 Amortization of Intangible Assets. The Omnibus Budget 
            Reconciliation Act (OBRA) of 1993 added section 197 to the 
            Internal Revenue Code, which provides for a 15-year 
            amortization of goodwill and certain other intangible 
            assets. OBRA 1993 also amended section 167 of the Code to 
            provide specified amortization periods for certain computer 
            software and mortgage servicing rights. These provisions 
            are generally effective for intangibles acquired after 
            August 10, 1993. Proposed regulations will be issued to 
            implement these two Code sections and provide guidance to 
            taxpayers on the meaning and scope of certain provisions of 
            the statute and its anti-churning rules.
 Substantiation and Disclosure Requirements for Certain 
            Charitable Contributions. OBRA 1993 amended the Internal 
            Revenue Code to require a taxpayer desiring an income tax 
            deduction for a charitable contribution of $250 or more to 
            obtain a written acknowledgement of the contribution from 
            the donee organization containing information not typically 
            provided by donee organizations. OBRA 1993 also amended the 
            Code to require donee organizations to supply a disclosure 
            statement to the donor when the

[[Page 62129]]

            organization provided goods or services in return for a 
            payment in excess of $75. In fiscal year 1995, the IRS 
            issued proposed regulations providing a number of 
            simplifying and clarifying provisions to facilitate 
            taxpayers' compliance with the new provisions. For example, 
            the proposed regulations provide that certain token items 
            and customary membership benefits that are offered to 
            donors can be disregarded when calculating charitable 
            contribution deductions or preparing acknowledgement and 
            disclosure statements. Final regulations providing 
            additional guidance will be published in fiscal year 1997.
 Mark-to-Market Accounting for Dealers in Securities. OBRA 1993 
            amended the Internal Revenue Code to required dealers in 
            securities to account for their securities by marking them 
            to market. The statutory definitions of the terms 
            ``security'' and ``dealer in securities'' are extremely 
            broad. Preliminary guidance in the form of temporary 
            regulations was provided in 1993. A regulation providing 
            additional guidance will be published in fiscal year 1997.
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency (OCC) is responsible for 
overseeing the approximately 3,000 national banks that make up the 
national banking system. In this role, the OCC regulates, supervises, 
and examines national banks; makes determinations regarding their 
corporate powers; and assesses their relationships with their 
customers. The substantive content of the OCC's regulations reflects 
four organizing principles that support this mission:
 The OCC's regulations help ensure safety and soundness by 
            establishing standards that set the limits of acceptable 
            conduct for national banks.
 The OCC's regulations promote competitiveness by facilitating 
            a national bank's ability to develop new lines of business, 
            subject to any safeguards that are necessary to ensure that 
            the bank has the expertise to manage risk effectively and 
            adapt its business practices to deal responsibly with its 
            customers.
 The OCC's goal is to improve efficiency and reduce burden by 
            updating and streamlining its regulations and eliminating 
            those that no longer contribute significantly to the 
            fullfillment of its mission.
 The OCC's regulations help assure fair access to financial 
            services for all Americans by removing unnecessary 
            impediments to the flow of credit to consumers and small 
            businesses, by encouraging national banks' involvement in 
            community development activities, and by implementing 
            Federal laws designed to protect consumers of financial 
            services.
In mid-1993, the OCC initiated its Regulation Review Program, which 
comprises a top-to-bottom review of all of the OCC's regulations. The 
program is part of the OCC's overall effort to promote an environment 
where risk is prudently managed by banks and appropriately monitored by 
the OCC without imposing unnecessary regulatory burdens that undermine 
the ability of banks to operate efficiently, compete vigorously, and 
provide credit and other financial products and services to the public. 
The program also responds to the need for regulation that is effective 
but sensible and cost-conscious.
The OCC's regulatory priorities for fiscal year 1997 include 
completion, by the end of calendar year 1996, of the review of all of 
its rules under the Regulation Review Program. Among these regulatory 
projects are:
 Investment Securities: The OCC is substantially revising its 
            rules that prescribe the standards under which national 
            banks may purchase, sell, deal in, and underwrite 
            investment securities. The new regulations group related 
            subjects together, clarify areas where the current rules 
            are unclear, and update various provisions to address 
            market developments and to incorporate significant OCC 
            interpretations, judicial decisions, and amendments to the 
            governing statute.
 Disposition of Credit Life Insurance: The OCC is revising its 
            regulations regarding the provision of credit life 
            insurance by national banks which are both outdated and 
            incomplete.
 Fiduciary Activities of National Banks: The proposal seeks to 
            make less burdensome the requirements regarding the 
            exercise of fiduciary powers, while preserving appropriate 
            protection for trust customers. The proposal reflects 
            recent court and administrative decisions relating to, 
            among other things, collective funds for IRA and Keogh 
            accounts.
 Recordkeeping and Confirmation Requirements for Securities 
            Transactions: The OCC has proposed to revise its 
            regulations specifying the recordkeeping and confirmation 
            requirements for bank securities transactions to bring them 
            up to date, as well as to streamline and clarify them.
 Community Development Corporation and Project Investments: The 
            OCC rules relating to community development corporations 
            and project investments are being revised to conform the 
            regulation's standards and procedures to the processes and 
            concepts used in other OCC regulations. This revision also 
            proposes to give banks greater flexibility in conducting 
            their community development activities and investments.
 Extensions of Credit to National Bank Insiders: The OCC has 
            proposed to revise its rules limiting extensions of credit 
            to national bank insiders to reduce burden and complexity 
            and to clarify differences between the standards applied 
            under part 31 and those contained in the OCC's lending 
            limits regulations.
Also a priority during fiscal year 1997 will be the continuation of the 
OCC's work with the other Federal banking agencies to achieve greater 
uniformity in regulations that implement common statutory provisions or 
supervisory policies, as required by section 303 of the Community 
Development and Regulatory Improvement Act of 1994 (CDRIA). Section 303 
requires the Federal banking agencies to work to make uniform their 
regulations and guidelines implementing common statutory or supervisory 
policies. Among these and other regulatory projects are:
 Collateralized Transactions: This proposed rule, which is a 
            joint agency effort with the Federal Reserve Board (FRB), 
            the Federal Deposit Insurance Corporation (FDIC), and the 
            Office of Thrift Supervision (OTS), would clarify the 
            capital treatment of certain qualifying collateralized 
            transactions, as well as make uniform the various capital 
            rules of the banking agencies.
 Capital Rules: The OCC, the FRB, the FDIC, and the OTS are 
            considering various amendments to the risk-based capital 
            guidelines of each agency to achieve greater uniformity by 
            eliminating existing certain interagency differences in 
            capital treatment. Specific areas in the risk-based capital 
            guidelines under consideration include (1) second liens on 
            one- to four-family residential mortgages, (2) presold one- 
            to four-family construction loans, (3) mutual funds, and 
            (4) the leverage ratio.

[[Page 62130]]

 Servicing Rights: In 1995, the banking agencies published an 
            interim rule to eliminate the accounting distinctions 
            between originated mortgage servicing rights and purchased 
            mortgage servicing rights, and to clarify that both 
            categories are subject to the deduction requirements for 
            regulatory capital. This interim rule was developed to 
            respond to the Financial Accounting Standards Board (FASB) 
            Financial Accounting Statement (FAS) 122, which addressed 
            mortgage servicing rights. Subsequent to the interim rule, 
            FASB published FAS 125, which eliminated the distinction 
            between excess and normal servicing fees relating to 
            servicing rights. The agencies are planning to issue a new 
            proposed rule on the capital treatment of excess servicing 
            fees; a final rule will address both mortgage servicing 
            rights and excess servicing fees.
 Recourse on Small Business Loan Obligations: This rule, which 
            implements CDRIA section 208, generally would permit banks 
            to hold capital against the face amount of recourse 
            obligation (rather than the amount of the asset transferred 
            with recourse) on qualifying small business loans if the 
            bank establishes a reserve equal to the bank's reasonable 
            estimate liability under the recourse obligation.
 Recourse and Direct Credit Substitutes: This proposal by the 
            banking agenices will amend the risk-based capital 
            guidelines to provide consistency with respect to the 
            capital treatment of recourse arrangements and direct 
            credit substitutes. The agenices expect to propose one or 
            more approaches that would enable them to match the risk-
            based capital assessment more closely to an institution's 
            relative risk of loss in asset securitization.
 Government Securities Sales Practices: The OCC, in 
            coordination with the FRB and the FDIC, has issued proposed 
            rules regarding the responsibilities of banks that are 
            Government securities brokers or dealers when making 
            recommendations to their customers concerning Government 
            securities.
 Prohibition Against Deposit Production Offices: The OCC, 
            together with the FRB, the FDIC, and the OTS, will issue a 
            regulation required by section 109 of the Riegle-Neal 
            Interstate Banking and Branching Efficiency Act of 1994 (12 
            U.S.C. 1835a), which is intended to insure that out-of-
            State banks do not use their new interstate branching 
            authority primarily for the purpose of deposit production.
Finally, the OCC expects during fiscal year 1997 to develop a new 
initiative to assess the effectiveness of its regulations in meeting 
articulated policy goals. This initiative is intended to facilitate the 
OCC's efforts to keep its regulations current by making revisions when 
necessary to keep pace with changes in legal requirements, as well as 
with developments in the financial services business.
Office of Thrift Supervision
As the primary Federal regulator of the thrift industry within the 
United States, the Office of Thrift Supervision (OTS) has established 
regulatory objectives and priorities to effectively and efficiently 
supervise thrift institutions. These objectives include maintaining and 
enhancing: The safety and soundness of the thrift industry; a flexible, 
responsive regulatory structure that enables savings associations to 
provide credit and other financial services to their communities, 
particularly housing credit; and an approach to supervision that is 
risk-focused and proactive. The OTS believes that its objectives and 
priorities are consistent with those established by the President.
Pursuant to section 303 of the Community Development and Regulatory 
Improvement Act of 1994 (CDRIA) and the Regulatory Reinvention 
Initiative of the Vice President's National Performance Review, OTS has 
conducted a page-by-page review of its regulations to determine whether 
each regulation is necessary, imposes the least possible burden 
consistent with safety and soundness, and is written in a clear, 
straightforward manner. The results of this review were published in 
December 1995.
During fiscal year 1996, OTS issued a series of substantive rules to 
make more significant burden-reducing changes in a number of key areas 
of its regulations, including regulations governing lending, 
subsidiaries, corporate governance, and conflicts of interest.
During fiscal year 1997, under the auspices of the Federal Financial 
Institutions Examination Council, OTS and the other Federal banking 
agencies expect to issue regulations implementing section 303 of CDRIA. 
This project will make uniform all regulations and guidelines 
implementing common statutory provisions or supervisory policies. 
Several of these joint initiatives are addressed above in the fiscal 
year 1997 regulatory plan of the Office of the Comptroller of the 
Currency.
Finally, the agency has identified and brought to Congress's attention 
certain statutory impediments to streamlining some regulations or 
providing additional flexibility. These include section 6 of the Home 
Owners' Loan Act (HOLA), which requires the liquidity regulation at 
part 566, section 5(f) of the HOLA, which requires that Federal savings 
associations maintain membership in a Federal Home Loan Bank, and 
section 10(m) of the HOLA, which mandates the Qualified Thrift Lender 
test.
United States Customs Service
The United States Customs Service is responsible for administering laws 
concerning the importation of goods into the United States. This 
includes inspecting imports, collecting applicable duties, over-seeing 
the activities of persons and businesses engaged in importing, and 
enforcing the laws concerning smuggling and trafficking in contraband. 
The regulatory priorities of Customs for fiscal year 1997 are to 
continue to facilitate procedures for legitimate commercial 
transactions and to provide further obstacles to the flow of narcotics 
and other contraband into the United States.
During fiscal year 1996, one of Customs priorities was to amend its 
regulations to reflect a reorganization the purpose of which is to make 
the agency more efficient and responsive to its customers by 
eliminating two management layers (7 regions, 42 districts). Customs 
amended its regulations on an interim basis to put this reorganization 
into effect and expects to finalize these amendments this fiscal year.
One of Customs regulatory responsibilities is to issue regulations that 
clearly set forth for the importing public the requirements that they 
must follow when importing merchandise subject to certain international 
agreements. During fiscal year 1996, Customs updated regulations 
implementing provisions of the Uruguay Round Agreements Act, which set 
forth standards governing the determination of the country of origin of 
textile and apparel products, and issued interim regulations 
establishing procedural and other requirements that apply to the 
collection, waiver and reduction of duties under the duty-deferral 
program provisions of the North American Free Trade Agreement (NAFTA). 
During fiscal year 1997, Customs plans to finalize the NAFTA duty-
deferral

[[Page 62131]]

program regulations and to issue and finalize regulations regarding a 
United States-Canada Softwood Lumber Agreement.
During fiscal year 1997, Customs also plans to undertake several other 
regulatory actions that will affect the traveling and importing public, 
customs brokers, carriers and commercial importers. Customs will be 
continuing the reinvention of its regulatory procedures begun under 
authority granted by the Customs Modernization provisions of the North 
American Free Trade Agreement Implementation (NAFTA) Act. Customs 
reinvention efforts, in accordance with the principles of E.O. 12866, 
have involved and will continue to involve much input from the 
importing public. During fiscal year 1997, Customs will accord priority 
to several regulatory actions focusing on the development of a more 
automated environment to expedite the entry, processing and release of 
imported commercial merchandise. These regulations will benefit the 
importing public by facilitating the work of Customs officers and the 
trade community. Among the actions that Customs will pursue in this 
regard, which will improve the efficiency of Customs operations, reduce 
paperwork and administrative costs, are: I74 Allowing for 
paperless procedures regarding extension and suspension of liquidation 
notices and generally improving and clarifying the administrative 
process and simplifying the regulations pertaining to liquidations and 
extensions and suspensions of liquidation.
 Allowing elements of an entry, other than those relating to 
            the admissibility of merchandise, that are undetermined at 
            the time an entry summary or an import activity summary 
            statement is required to be submitted, to be provided to 
            Customs at a later date. This reconciliation process will 
            expedite the release of commercial merchandise.
 Accrediting commercial laboratories to permit them to analyze 
            a wide range of commercial products for Customs purposes. 
            This change will facilitate the release of merchandise 
            because it will enable importers to receive laboratory 
            results earlier.
Bureau of Alcohol, Tobacco and Firearms
The Bureau of Alcohol, Tobacco and Firearms (ATF) issues regulations to 
enforce the Federal laws relating to the manufacture and commerce of 
alcohol products, tobacco products, firearms and explosives.
ATF's regulations carry out these missions and are designed to:
 Curb illegal traffic in and criminal use of firearms and 
            assist State, local, and other Federal law enforcement 
            agencies in reducing crime and violence;
 Facilitate investigations of violations of Federal explosives 
            laws, including arson-for-profit schemes;
 Regulate the alcohol, tobacco, firearms, and explosives 
            industries, including the issuance of licenses and permits;
 Assure the collection of all alcohol, tobacco, firearms, and 
            ammunition tax revenues and obtain a high level of 
            voluntary compliance with those laws;
 Suppress commercial bribery, consumer deception and other 
            prohibited practices in the alcoholic beverage industry;
 Suppress the illicit manufacture and sale of alcoholic 
            beverages for which Federal tax has not been paid; and
 Assist the States in their efforts to eliminate interstate 
            trafficking in and the sale and distribution of cigarettes 
            in avoidance of State taxes.
In its regulatory plan for fiscal year 1996, ATF accorded priority to 
issuing a rule implementing Public Law 103-322, the Violent Crime 
Control and Law Enforcement Act of 1994. Temporary regulations 
implementing Public Law 103-322 were issued on April 6, 1996, and 
another temporary regulation related to this law was issued on July 29, 
1996.
ATF made significant progress in accomplishing the goals of the 
President's regulatory reform initiative. The page-by-page review of 
all its regulations--and its outreach effort with the public and the 
regulated industries--resulted in the identification of more than 675 
pages of its regulations in the Code of Federal Regulations that it 
will streamline or eliminate. For example, ATF expects to replace the 
alcohol beverage label and formula approval system with a simplified 
registration system and to reduce the administrative burdens associated 
with the current basic permit application process for producers, 
wholesalers, and importers of alcohol beverages. ATF accorded priority 
to making as many of these changes as possible. ATF has either 
completed or is in the final stages of the elimination or reduction of 
more than 500 identified pages of regulations.
ATF is also according priority during fiscal year 1997 to issuing a 
notice to review and reassuess a rule issued in 1990. This rule 
concerns explosives storage and recordkeeping requirements for members 
of the fireworks industry, many of which are small businesses. This 
notice will be issued to ascertain whether the 1990 rule should be 
amended, rescinded, or remain unchanged in order to minimize the 
economic impact on small businesses while continuing to adhere to 
established statutes. Another priority project during fiscal year 1997 
is the issuing of a notice of proposed rulemaking ot streamline 
regulations applying to the brewing industry. These proposed changes 
will streamline brewery reports and operations, eliminate obsolete 
regulatory provisions, and establish a separate group of simplified 
regulations that would apply to brewpubs. Both of these projects are 
described in Part II of The Regulatory Plan. A potential priority 
project is the preparation of a temporary rule to implement anticipated 
statutory changes regarding use of distilled spirits in nonbeverage 
products. These changes, which would allow the removal of distilled 
spirits from a distilled spirits plant without the payment of the full 
excise tax, would benefit users of distilled spirits for nonbeverage 
products, especially small businesses.
Financial Management Service
The Financial Management Service (FMS) issues regulations to implement 
its mission of improving the quality of Government financial management 
by linking program and financial mangement objectives, and providing 
financial services, information, advice, and assistance. The FMS serves 
taxpayers, the Treasury Department, Federal program agencies, and 
Government policymakers.
FMS's regulatory priorities for fiscal year 1997 include the 
implementation of the Debt Collection Inprovement Act of 1996, 
including the provisions authorizing administrative offsets to assist 
families by collecting delinquent child support obligations. The Act 
also contains important provisions governing the use of electronic 
funds transfer (EFT) for most Federal payments and establishes Treasury 
as the lead agency for Federal debt collection efforts. FMS will 
promulgate new regulations to provide guidance for Federal agencies in 
making payments by EFT and in utilizing the Act's debt collection 
tools. The rule concerning EFT payments is discussed in Part II of The 
Regulatory Plan.

[[Page 62132]]

FMS will also continue implementing the Electronic Federal Tax payment 
System to eliminate paper processing. In addition, FMS plans to revise 
the Government's Automated Clearing House standards to meet the needs 
of the new tax payment system. These changes will speed the flow of 
funds to the Treasury and ease the regulatory burden on private 
industry.
These initiatives relate to the President's goals of improving 
technology to streamline Government payments and collections, and of 
using EFT where possible.
Bureau of the Public Debt
The Bureau of the Public Debt administers regulations governing 
transactions in Government securities effected by Government securities 
brokers and dealers and regulations that implement Treasury's borrowing 
authority, including rules governing the sale and issue of Treasury 
securities.
The Government Securities Act of 1986 (GSA), as amended, authorizes the 
Secretary of the Treasury to prescribe rules governing financial 
responsibility, the protection of customer funds and securities, 
recordkeeping, reporting, audit, and large position reporting for all 
Government securities brokers and dealers, including financial 
institutions. These rules fulfill the Treasury's statutory 
responsibility to safeguard the efficient functioning of the Government 
securities market and are designed to prevent fraudulent and 
manipulative acts and practices and to protect the integrity, 
efficiency and liquidity of the market. The Department is committed to 
implementing rules that make sense from both a regulatory and market 
efficiency perspective. Accordingly, the Department seeks to balance 
the benefits of regulation with the compliance costs imposed on the 
Government securities market and its participants.
The rules setting out the terms and conditions for the sale and issue 
by the Department to the public of marketable book-entry Treasury 
bills, notes and bonds are also known as the uniform offering circular. 
These rules apply to securities held in accounts in the book-entry 
system established by the Department and operated by the Federal 
Reserve Banks, known as the Treasury/Reserve Automated Debt Entry 
System (TRADES), as well as to securities held in accounts directly 
with Treasury in the TREASURY DIRECT system. The uniform offering 
circular describes the types of securities offered for sale, the 
auction methods by which they are sold, the process by which bidders 
submit bids, the process for awarding securities to successful bidders 
and the authorized payment methods.
During fiscal year 1997, priority will be given to issuing final rules 
setting out the terms, conditions, and features for a new security 
product--Treasury Inflation-Indexed Securities. The Department intends 
to issue inflation-indexed securities, in which the nominal return is 
linked to the inflation rate in prices or wages, as officially 
published by the U.S. Government, in order to save on interest costs 
and to broaden the types of debt instruments available to investors in 
U.S. financial markets. These new securities would offer explicit 
inflation protection to investors, which has heretofore been 
unavailable in a Treasury debt instrument and may prove to be 
attractive investments to investors who do not now purchase Treasury 
securities to any significant extent. This broadening of the market for 
Treasury securities should also result in lower overall interest costs 
to the Treasury over time. A priority of the IRS for fiscal year 1997 
is the issuance of regulations providing guidance on the Federal income 
tax treatment of these securities.
Financial Crimes Enforcement Network
The regulations of the Financial Crimes Enforcement Network (FinCEN) 
constitute the core of Treasury's anti-money laundering initiative and 
an essential component of Treasury's anti-narcotics effort. The Bank 
Secrecy Act Act (BSA) authorizes the Secretary of the Treasury to issue 
regulations requiring financial institutions to keep records and file 
reports that are determined to have a high degree of usefulness in 
criminal, tax, or regulatory proceedings and to implement counter-money 
laundering programs and compliance procedures.
Since mid-1994, FinCEN has been engaged in a thorough review of its 
regulatory policies and has been building a partnership between 
Government and the financial sector to fight money laundering. The 
keystone of that partnership is the recognition that only a cooperative 
relationship between Government and industry can provide a way to 
implement a three-pronged strategy of prevention, detection, and 
enforcement against those who truly seek to use the financial system to 
promote or further illegal activity. FinCEN recognizes that BSA 
compliance imposes costs on the financial community and it should 
require recordkeeping and reporting only when the benefits to law 
enforcement efforts are clear.
During fiscal year 1996, FinCEN completed a number of important 
regulatory projects, including the following:
 Funds Transfer Regulations. In response to concerns raised by 
            the banking industry, FinCEN finalized amendments to its 
            funds transfer recordkeeping regulations.
 Tribal Gaming. Implementing a 1994 amendment to the BSA, 
            FinCEN issued final regulations subjecting tribal casinos 
            to the reporting and recordkeeping rules for casinos.
 Suspicious Transaction Reports. FinCEN issued a final rule 
            requiring suspicious transaction reporting by banks.
 Exemption from Cash Transaction Reporting (CTR) Requirements. 
            As a required by legislation enacted in 1994, FinCEN is 
            seeking to reduce the number of CTRs required to be filed 
            by 30 percent. FinCEN issued an interim rule, with request 
            for comment, that exempted many transactions from the CTR 
            filing requirement.
During fiscal year 1997, FinCEN will continue to review and revise its 
existing regulations. In all cases, FinCEN will continue to work with 
the financial community to reduce administrative burdens associated 
with complying with the statutes while enhancing the usefulness of BSA 
information for law enforcement, financial regulators, and policy 
makers. During fiscal year 1997, FinCEN is continuing a general 
revision and simplification of all of its regulations, and will accord 
priority to the following projects:
 Suspicious Transaction Reporting. FinCEN plans to extend the 
            requirement to report suspicious transactions to non-bank 
            financial institutions, beginning with notices of proposed 
            rulemaking concerning securities brokers and dealers and 
            casinos.
 ``Know your Customer'' and Other Anti-Money Laundering 
            Programs. Closely related to the suspicious transaction 
            reporting requirement is FinCEN's plan to require banks and 
            other financial institutions to implement certain ``know 
            your customer'' and other anti-money laundering programs.
 Federal Registration of Money Transmitters. In response to a 
            specific statutory directive, FinCEN will undertake to 
            issue a notice of proposed rulemaking to establish the

[[Page 62133]]

            terms and conditions under which non-bank financial 
            institutions (money transmitters) must register with the 
            Treasury Department.
 Foreign Bank Drafts. FinCEN will propose to expand the 
            definition of monetary instrument, for purposes of the 
            reporting of cross-border transportation, to include 
            certain foreign bank drafts. The proposed expansion would 
            implement only as much of the broad authority granted by a 
            1994 amendment to the BSA as FinCEN believes is required to 
            address the issue of the sale of these foreign bank drafts.
 Delegation of Civil Penalty Authority for Bank Secrecy Act 
            Violations to Bank Regulatory Agencies. Also pursuant to a 
            specific statutory directive, FinCEN intends to delegate to 
            the five financial institutions' supervisory agencies and 
            the Securities and Exchange Commission the authority to 
            impose and collect civil monetary penalties for BSA 
            violations committed by their respective regulated 
            institutions.
Community Development Financial Institutions Fund
The Community Development Financial Institutions Fund was established 
by the Community Development Banking and Financial Institutions Act of 
1994 (12 U.S.C. 4701 et seq.) The primary purpose of the Fund is to 
provide investments in and assistance to community development 
financial institutions (CDFIs), principally through the CDFI Program. 
The Fund also administers the Bank Enterprise Award (BEA) Program, 
which encourages insured depository institutions to engage in certain 
eligible development activities and to make equity investments in 
CDFIs. The Fund's regulatory priorities for fiscal year 1997 is to 
revise its existing regulations to streamline the application and 
review process for CDFIs.
_______________________________________________________________________
TREAS--Financial Management Service (FMS)

                              -----------

                            FINAL RULE STAGE

                              -----------

90.  MANAGEMENT OF FEDERAL AGENCY DISBURSEMENTS
Priority:


Other Significant


Legal Authority:


 5 USC 301; 31 USC 321; 31 USC 3301; 31 USC 3302; 31 USC 3321; 31 USC 
3325; 31 USC 3327; 31 USC 3328; 31 USC 3332; 31 USC 3335; 31 USC 6503


CFR Citation:


 31 CFR 208


Legal Deadline:


 Final, Statutory, January 1999.


Abstract:


Public Law 104-134 amended 12 USC 3332 to require Federal agencies to 
convert all Federal payments (other than payments under the Internal 
Revenue Code) from checks to electronic funds transfer in two phases. 
On July 26, 1996, an interim rule was published to implement the 
provisions of section 3332 that took effect on that date. An NPRM will 
be published in the spring of 1997 to implement the provisions of 
section 3332 that take effect in January 1999.


Statement of Need:


Section 31001(x) of the Debt Collection Improvement Act of 1996 (Act) 
requires Federal agencies to convert from checks to electronic funds 
transfers (EFT) in two phases. During Phase 1, which began on July 26, 
1996, all recipients of Federal payments (other than payments under the 
Internal Revenue Code of 1986) who become eligible to receive those 
payments on or after July 26, 1996, must receive them electronically 
unless the recipient certifies that the recipient does not have an 
account at a financial institution or authorized payment agent. Phase 2 
covers the conversion from checks to EFT for all Federal payments 
(except payments under the Internal Revenue Code of 1986). The Act 
provides, subject to waivers that may be granted by the Secretary of 
the Treasury, that all Federal payments made after January 1, 1999, 
must be made by EFT. FMS issued an interim rule to implement the Phase 
1 requirements. FMS plans to publish a notice of proposed rulemaking 
and final rule in 1997 to provide necessary guidance to agencies 
redarding implementation of Phase 2.


Summary of the Legal Basis:


Section 31001(x) of the Act amends 31 U.S.C. to require Federal 
agencies to convert from paper-based payment methods to EFT in two 
phases under regulations prescribed by the Secretary of the Treasury.


Alternatives:


FMS is evaluating options for implementing the Secretary's authority to 
grant waivers from the EFT requirements.


Anticipated Costs and Benefits:


Costs for implementing the regulation include the collection of 
information about the financial institution to which EFT payments will 
be transmitted. This information collection is required by the Act. 
Cost savings will accrue to the Government from the elimination of 
Federal payments by paper checks.


Risks:


Not applicable.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
Interim Final Ru61 FR 39254                                    07/26/96
Interim Rule Comment Period End                                11/25/96
NPRM                                                           12/00/97
Final Action                                                   12/00/97
Small Entities Affected:


None


Government Levels Affected:


Federal


Agency Contact:
Aurora Kassalow
Financial Program Specialist
Department of the Treasury
Financial Management Service
401 14th St. SW.
Room 420
Washington, DC 20227
Phone: 202 874-5742
RIN: 1510-AA56
_______________________________________________________________________
TREAS--Bureau of Alcohol, Tobacco and Firearms (BATF)

                              -----------

                             PRERULE STAGE

                              -----------

91.  EXPLOSIVES MATERIALS IN THE FIREWORKS INDUSTRY
Priority:


Other Significant


Legal Authority:


 5 USC 522(a); 18 USC 847; 18 USC 921 to 930; 18 USC 1261; 19 USC 1612 
to 1613; 19 USC 1618; 26 USC 7101; 26 USC 7322 to 7326; 31 USC 9301; 31 
USC 9303 to 9304; 40 USC 304(k)


CFR Citation:


 27 CFR 55


Legal Deadline:


None


Abstract:


Complying with the Regulatory Flexibility Act (Pub. L. 96-354), ATF

[[Page 62134]]

is required to amended regulations in 27 CFR part 55, as a result of 
T.D. ATF-293, effective March 7, 1990. This document request comments 
from members of explosives industry and other interested persons as to 
the effectiveness to the changes in T.D. ATF-293.


Statement of Need:


This general notice will initiate the periodic review under the 
Regulatory Flexibility Act (5 USC 610) of a final rule issued in 1990 
affecting the fireworks industry. That rule amended certain regulations 
codified at 27 CFR part 55, mostly concerning the recordkeeping and 
storage of fireworks explosive materials. The regulations also codified 
two fireworks related rulings issued in 1979 and 1985, and the 
provisions of PL 99-308 relating to black powder. The 1990 regulations 
were issued as result of the number and severity of explosions 
occurring on the premises of special fireworks plants. Following public 
comments on the existing regulations, ATF will determine whether they 
should be eliminated, modified, or continued without change.


Summary of the Legal Basis:


Section 847 of title 18, United States Code, grants to the Secretary of 
the Treasury broad discretion to promulgate regulations necessary for 
the importation, manufacture, distribution and safe storage of 
explosive materials. Section 846 of title 18, United States Code, 
authorizes the Secretary to prescribe precautionary measures to prevent 
the recurrence of accidental explosions in which explosive materials 
were involved. This notice is being issued pursuant to section 610 of 
the Regulatory Flexibility Act (5 USC 610), which requires an agency to 
review within ten years of publication rules for which an agency 
prepared a final regulatory flexibility analysis with respect to the 
impact of the rule on small businesses or other small entities.


Alternatives:


Not applicable to this notice; alternatives will be examined in the 
context of public comments to the current regulations.


Anticipated Costs and Benefits:


Unknown at this time.


Risks:


Not applicable.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
ANPRM                                                          01/00/97
ANPRM Comment Period End                                       03/00/97
Small Entities Affected:


Businesses


Government Levels Affected:


None


Agency Contact:
Mark Waller
Specialist
Department of the Treasury
Bureau of Alcohol, Tobacco and Firearms
650 Massachusetts Avenue NW.
Washington, DC 20226
Phone: 202 927-8310
Fax: 202 927-7488
RIN: 1512-AB48
_______________________________________________________________________
TREAS--BATF

                              -----------

                          PROPOSED RULE STAGE

                              -----------

92. REVISION OF BREWERY REGULATIONS AND ISSUANCE OF REGULATIONS FOR 
TAVERNS ON BREWERY PREMISES (BREWPUBS)
Priority:


Other Significant


Reinventing Government:


This rulemaking is part of the Reinventing Government effort. It will 
revise text in the CFR to reduce burden or duplication, or streamline 
requirements.


Legal Authority:


 26 USC 5401 to 5417; 27 USC 205


CFR Citation:


 27 CFR 7; 27 CFR 25


Legal Deadline:


None


Abstract:


ATF intends to streamline regulations applying to breweries. ATF will 
eliminate obsolete regulatory provisions. A formula system for 
manufactured beer products will replace statements of process attached 
to the brewers notice. The annual notice for small brewers to pay 
reduced rate of tax will be eliminated. Separate regulations for 
brewpubs will be added to part 25. A section will be added to part 25 
to authorize and regulate the alternating use of brewery premises by 
different brewers.


Statement of Need:


ATF intends to streamline its regulations applying to the brewing 
industry. These changes will simplify brewery reports and operations 
and eliminate obsolete regulatory provisions. Specific changes would 
include the implementation of a formula system for the breweries to 
replace the statement of process, the establishment of a separate 
subpart containing simplified regulations for brewpubs, and the 
regulatory authorization of alternating brewery premises among 
different proprietors. The annual notice to pay reduced rate of tax for 
most brewers would be eliminated. Additional brewers would be 
authorized to file the Brewer's Report of Operations on a quarterly 
basis, and many brewers would be permitted to take inventories 
quarterly rather than monthly. Minimum production standards for beer 
would be prescribed in regulations which would permit the filing of 
fewer formulas than now required. The statement of net contents 
requirement would be revised for certain container sizes.


Summary of the Legal Basis:


AFT has undertaken this review of brewery regulations as part of the 
President's Regulatory Initiative. These regulations are issued under 
the general authority of the Secretary of the Treasury to promulgate 
regulations to implement the Internal Revenue Code and the Federal 
Alcohol Administration Act.


Alternatives:


Not applicable. ATF believes that industry will support these 
regulatory changes because they will streamline regulatory requirements 
applying to the brewing industry.


Anticipated Costs and Benefits:


The proposed regulations will benefit the brewing industry by reducing 
required inventories, notices, and other submissions to ATF. ATF does 
not foresee added costs to brewers as a result of the proposed 
regulations.


Risks:


Not applicable.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
NPRM                                                           12/00/96
NPRM Comment Period End                                        03/00/97
Final Action                                                   12/00/97

[[Page 62135]]

Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Charles N. Bacon
Coordinator
Department of the Treasury
Bureau of Alcohol, Tobacco and Firearms
650 Massachusetts Avenue NW.
Washington, DC 20226
Phone: 202 927-8230
Fax: 202 927-8602
RIN: 1512-AB37
BILLING CODE 4810-25-F