Disclosure of Records, 102735-102742 [2024-29988]
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Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations 102735
§ 5.72
Subpart E—Mandatory Label
Information
Coloring materials.
5. Amend § 5.74 by revising
paragraphs (a)(1) and (b)(4) to read as
follows:
(4) In the case of whisky made in the
United States and stored in reused oak
barrels, other than corn whisky, light
whisky, American single malt whisky,
and straight American single malt
whisky, in lieu of the words ‘‘ll years
old’’ specified in paragraphs (b)(1) and
(2) of this section, the period of storage
in the reused oak barrels must appear on
the label as follows: ‘‘stored ll years
in reused cooperage.’’
*
*
*
*
*
§ 5.74 Statements of age, storage, and
percentage.
Subpart I—Standards of Identity for
Distilled Spirits
*
3. Amend § 5.66 by revising
paragraphs (f)(1) introductory text and
(f)(1)(i) to read as follows:
■
§ 5.66 Name and address for domestically
bottled distilled spirits that were wholly
made in the United States.
*
*
*
*
*
(f) * * *
(1) The State of distillation, which is
the State in which original distillation
takes place, must appear on the label of
any type of whisky defined in
§ 5.143(c)(2) through (7), (15), and (16),
which is distilled in the United States.
The State of distillation may appear on
any label and must be shown in at least
one of the following ways:
(i) By including a ‘‘distilled by’’ (or
‘‘distilled and bottled by’’ or any other
phrase including the word ‘‘distilled’’)
statement as part of the mandatory name
and address statement, followed by a
single location;
*
*
*
*
*
■ 4. Amend § 5.72 by adding a sentence
at the end of paragraph (c) to read as
follows:
*
*
*
*
(c) * * * Provided, if any amount of
caramel color is used in American
single malt whisky, or in straight
American single malt whisky, a
statement specifying the use of caramel
color must appear on the label.
*
*
*
*
*
■
(a) * * *
(1) As defined in § 5.1, age is the
length of time during which, after
distillation and before bottling, the
distilled spirits have been stored in oak
barrels. For bourbon whisky, rye
whisky, wheat whisky, malt whisky, or
rye malt whisky, and straight whiskies
other than straight corn whisky and
straight American single malt whisky,
aging must occur in charred new oak
barrels.
*
*
*
*
*
(b) * * *
6. Amend § 5.143 by:
a. Redesignating paragraphs (c)(16)
through (18) in table 2 as paragraphs
(c)(17) through (19);
■ b. Adding paragraphs (c)(15) and (16)
to table 1; and
■ c. Adding paragraph (d).
The additions read as follows:
■
■
§ 5.143
*
Whisky.
*
*
(c) * * *
*
*
TABLE 1 TO PARAGRAPH (c)—TYPES OF WHISKY AND PRODUCTION, STORAGE, AND PROCESSING STANDARDS
Type
*
*
*
Fermented mash of 100 160 or less, distilled at
percent malted barthe same distillery in
ley, produced in the
the United States.
United States.
(16) Straight American
single malt whisky.
Fermented mash of 100
percent malted barley, produced in the
United States.
*
*
*
*
(d) Transition period. A label with the
designation ‘‘American single malt
whisky’’ or ‘‘straight American single
malt whisky’’ may be used on distilled
spirits bottled before January 19, 2030,
if the distilled spirits conform to the
applicable standards set forth in this
part in effect prior to January 19, 2025.
Neutral
spirits
permitted
Storage
*
(15) American single
malt whisky.
*
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Distillation
proof
Source
160 or less, distilled at
the same distillery in
the United States.
*
Used, charred new, or
uncharred new oak
barrels; 700-liter maximum capacity; stored
only in the United
States.
Used, charred new, or
uncharred new oak
barrels for a minimum
of 2 years; 700-liter
maximum capacity;
stored only in the
United States.
Allowable coloring,
flavoring, blending
materials permitted
*
No ............
*
No, except for caramel
coloring and only if
disclosed on the
label.
No ............
No, except for caramel
coloring and only if
disclosed on the
label.
Signed: December 12, 2024.
Mary G. Ryan,
Administrator.
Approved: December 12, 2024.
Aviva R. Aron-Dine,
Deputy Assistant Secretary for Tax Policy.
DEPARTMENT OF THE TREASURY
[FR Doc. 2024–29938 Filed 12–13–24; 4:15 pm]
RIN 1530–AA28
BILLING CODE 4810–31–P
Disclosure of Records
Bureau of the Fiscal Service
31 CFR Part 323
[FISCAL–2023–0002]
Bureau of the Fiscal Service,
Department of the Treasury.
ACTION: Final rule.
AGENCY:
The Bureau of the Fiscal
Service (Fiscal Service) within the
SUMMARY:
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102736 Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations
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Department of the Treasury (Treasury) is
issuing regulations to implement
statutory requirements under the
SECURE 2.0 Act of 2022 that require
Treasury to provide certain U.S. savings
bond information to States. A State
receiving the information with respect
to an applicable savings bond may use
the information to locate the owner of
the bond pursuant to Treasury’s
regulations and the State’s own
standards and requirements under
abandoned property rules and
regulations of the State. Under the
SECURE 2.0 Act of 2022, Treasury is
required to issue regulations or
guidance to protect the privacy of
savings bond owners, prevent fraud, and
ensure that information disclosed to a
State is used solely to locate savings
bond owners.
DATES: This rule is effective December
18, 2024.
FOR FURTHER INFORMATION CONTACT:
Marcia Goodnight, Retail Securities
Services, at
RetailSecurityServicesComments@
fiscal.treasury.gov; or Lela Anderson,
Attorney-Advisor, at 304–480–8692.
SUPPLEMENTARY INFORMATION:
I. Background
The U.S. Department of the Treasury
has issued savings bonds since 1935 on
the credit of the United States to raise
funds for Federal programs and
operations. Article 8, Section 8, Clause
2 of the Constitution authorizes the
Federal Government to ‘‘borrow money
on the credit of the United States.’’
Under this grant of power, ‘‘Congress
authorized the Secretary of the
Treasury, with the approval of the
President, to issue savings bonds in
such form and under such conditions as
he may from time to time prescribe.’’
Free v. Bland, 369 U.S. 663, 667 (1962)
(citing the predecessor to 31 U.S.C.
3105). Congress provided that the
proceeds of savings bonds may be used
by the Federal Government for any
expenditures authorized by law. See 31
U.S.C. 3105(a).
Congress expressly authorized the
Secretary of the Treasury to establish
the terms and conditions that govern the
savings bond program. 31 U.S.C.
3105(c). Treasury’s implementing
regulations set forth ‘‘a contract between
the United States and savings bond
purchasers,’’ giving ‘‘purchasers
confidence that the United States will
honor its debts when a purchaser
surrenders a savings bond for payment’’
and protecting ‘‘the public fisc by
ensuring that Treasury does not face
multiple claims for payment on a single
savings bond.’’ 80 FR 80258 (Dec. 24,
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2015). In general, savings bonds are not
transferrable and are payable only to the
registered owner, except as described in
Treasury regulations detailing when
payment will be made to a person or
entity that is not the registered owner.
See 31 CFR 315.15, 353.15, and 360.15.
To redeem a paper savings bond, the
registered owner or a successor
specified in the regulations must
surrender the physical bond. See 31
CFR 353.35. Although there are
exceptions to this surrender
requirement, the exceptions are
‘‘carefully drawn to protect the owner’s
rights and to protect Treasury against
competing claims.’’ 80 FR 80258. For
example, if a claimant cannot surrender
the bond, the claimant must provide
satisfactory evidence of the loss, theft,
or destruction of the bond, or a
satisfactory explanation of the
mutilation or defacement, as well as
sufficient information to identify the
bond by serial number. See, e.g., 31 CFR
parts 315 and 353, subpart F. Pursuant
to express statutory authority, Treasury
regulations allow owners to keep their
bonds indefinitely and to surrender
them for payment at any time after the
bonds mature. See 31 U.S.C. 3105(b)
and 31 CFR parts 315 and 353, subpart
H.
Litigation Over State Escheat Claims
Many State escheat laws allow States
to take custody of unclaimed or
abandoned property. Treasury discussed
the effect of escheat on the rights of
savings bond owners in a 1952 bulletin
to the Federal Reserve Banks addressing
a State claim to the custody of four
savings bonds in the State’s possession,
which had belonged to a ward of the
State who died without heirs. In this
context, where the State had possession
of the bonds it sought to redeem,
Treasury stated that it will not recognize
a State claim to the custody of savings
bonds, but will recognize an escheat
judgment that confers title on a State
because ‘‘in escheat the state is ‘the
ultimate heir.’ ’’ 80 FR 80258 (quoting
Public Debt Bulletin No. 111, Subject:
State Statutes Concerning Abandoned
Property (Feb. 27, 1952) at 3). It was
unnecessary for the 1952 bulletin to
provide further detail about State
escheat claims because in that case the
State did not claim title over the bonds.
Id.
Treasury addressed a new, broader
custody escheat claim in 2004 and 2006,
when several States attempted to claim
the proceeds of all matured,
unredeemed bonds registered to
residents in their State. Unlike the claim
addressed by the 1952 bulletin, these
States did not possess the bonds they
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sought to redeem, which presumably
were still held by their owners. Treasury
informed the States that they ‘‘must
possess the bonds they seek to redeem.’’
80 FR 20259 & n.3 (citing 2004 and 2006
letters to various States). In the ensuing
litigation, the U.S. Court of Appeals for
the Third Circuit concluded that the
State unclaimed property statutes
conflicted with Federal law. See New
Jersey v. U.S. Dep’t of the Treasury, 684
F.3d 382, 407–09 (3d Cir. 2012), cert.
denied, 569 U.S. 1004 (2013). The
States’ ‘‘efforts to impose the status of
‘abandoned’ or ‘unclaimed’ on the
Federal Government’s obligations’’
could not be reconciled with the fact
that the bond proceeds are not
‘abandoned’ or ‘unclaimed’ under
Federal law because the owners of the
bonds may redeem them at any time
after they mature.’’ Id. at 409.
Subsequent litigation was prompted
by certain States enacting title escheat
laws specifically for savings bonds that
the States deemed to be ‘‘unclaimed’’ or
‘‘abandoned.’’ In 2000 and 2015,
respectively, Kansas and Arkansas
enacted statutes providing that a U.S.
savings bond is presumed to be
abandoned if it has not been redeemed
by a certain time and further providing
that such bonds escheat to the State a
certain time after the bonds are
presumed abandoned. See 80 FR 80259.
Pursuant to those laws, Kansas and
Arkansas initiated escheat proceedings
to claim title to bonds in their
possession, as well as to a broad class
of bonds the States did not possess.
With respect to the bonds not in their
possession, Kansas and Arkansas
published statements in local
newspapers of their intention to claim
title to bonds of a particular description.
Although bond owners were not parties
to the escheat proceeding, and may
never have learned that the State was
attempting to claim title over their
bonds, they were obligated to respond to
the escheat proceeding in order to
protect their ownership of the bonds. Id.
After obtaining ex parte escheat
judgments, Kansas and Arkansas sought
to redeem the savings bonds not in their
possession. Treasury denied those
requests.
The U.S. Court of Appeals for the
Federal Circuit upheld Treasury’s
decision for two independent reasons.
First, the Court of Appeals held that
‘‘federal law preempts the States’
escheat laws.’’ LaTurner v. United
States, 933 F.3d 1354, 1357 (Fed. Cir.
2019), cert. denied, 141 S. Ct. 239
(2020). The court explained that,
whereas ‘‘Treasury regulations impose
no time limit on the redemption of
savings bonds,’’ the State laws provide
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that, ‘‘if bond holders do not redeem
their bonds promptly enough (as
decided by the States), they lose
ownership and the bonds will transfer
to the state.’’ Id. at 1361. The court
determined that, because ‘‘federal law
takes precedence,’’ id. (quoting Murphy
v. National Collegiate Athletic Ass’n,
584 U.S. 453, 477 (2018)), ‘‘the bonds
belong to the original bond owners, not
the States, and thus the States cannot
redeem the bonds,’’ id. at 1357.
Second, the Court of Appeals held
that, ‘‘even if the States owned the
bonds, they could not obtain any greater
rights than the original bond owners,’’
and Treasury’s regulations make clear
that ‘‘a bond owner must provide the
serial number to redeem’’ the specific
bonds at issue. LaTurner, 933 F.3d at
1357. The court observed that ‘‘the
States do not have the physical bonds or
the bond serial numbers.’’ Id. The court
therefore determined that, ‘‘even if the
bonds here are considered lost,’’ id. at
1364, ‘‘Treasury properly denied [the
States’] request for redemption,’’ id. at
1357. The court also concluded that the
States could not ‘‘circumvent the
[regulatory] requirement’’ to ‘‘provide
the serial number’’ of the bonds by
asking ‘‘the government to disclose the
bond serial numbers as a matter of
discovery.’’ Id. at 1366. The Court of
Appeals denied the States’ petitions for
rehearing en banc, and the Supreme
Court denied the States’ petitions for
writs of certiorari. LaTurner v. United
States, 141 S. Ct. 239 (2020); Lea v.
United States, 141 S. Ct. 240 (2020).
While that litigation was ongoing,
Treasury amended its regulations in
2015 through notice-and-comment
rulemaking to clarify that it ‘‘will not
recognize an escheat judgment that
purports to vest a State with title to a
bond that the State does not possess.’’
31 CFR 315.88(a); see also 31 CFR
315.20(b) (‘‘Escheat proceedings will not
be recognized under this subpart.’’), 80
FR 80264–65. In a separate suit filed in
Federal district court, Kansas and four
other States challenged the amended
regulations as an allegedly unjustified
departure from Treasury’s past practice.
The district court rejected that
challenge, concluding that the
regulations clarified rather than changed
Treasury’s practice. See Estes v. U.S.
Dep’t of the Treasury, 219 F. Supp. 3d
17, 22 (D.D.C. 2016). The States
appealed but voluntarily dismissed the
appeal. See Order, LaTurner v. U.S.
Dep’t of the Treasury, No. 17–5015 (D.C.
Cir. Nov. 21, 2017).
Thus, under 31 U.S.C. 3105 and
Treasury’s implementing regulations,
U.S. savings bond owners are entitled to
redeem their bonds at any time after
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maturity without penalty; the United
States honors those debts in perpetuity.
See 31 CFR 353.35. State laws that treat
matured but not yet redeemed U.S.
savings bonds that are not in a State’s
possession as ‘‘abandoned’’ property
subject to escheatment undermine the
rights of registered owners or their heirs
to redeem matured bonds whenever
they choose through the simple act of
turning in the physical bonds to a
designated payor such as a local bank.
Treasury’s existing regulations preempt
any State law that deems U.S. savings
bonds ‘‘abandoned’’ because they are
not yet redeemed or otherwise interferes
with the Federal-law rights of the
registered owners or their heirs to
redeem them.
SECURE 2.0 Act of 2022
Against that backdrop, Congress
considered legislation to amend 31
U.S.C. 3105. As discussed further
below, Congress declined to enact a
2021 legislative proposal that would
have allowed States to escheat matured,
unredeemed savings bonds that are not
in their possession. Instead, Congress
enacted the SECURE 2.0 Act of 2022 1
(Secure 2.0 Act), which was signed into
law on December 29, 2022.
The Secure 2.0 Act added subsection
(f) to 31 U.S.C. 3105, requiring Treasury
to share certain U.S. savings bond
information with States for the purpose
of locating savings bond owners. Under
new subsection (f), Treasury ‘‘shall
provide each State, in digital or other
electronic form, with information
describing any applicable savings bond
which has an applicable address that is
within such State, including (i) the
name and applicable address of the
registered owner; and (ii) the name and
applicable address of any registered coowner or beneficiary.’’ 2 ‘‘Applicable
address’’ is defined as the registered
address for the registered owner (or coowner or beneficiary) of the savings
bond or the last-known address for the
registered owner (or co-owner or
beneficiary) available to the Secretary.3
‘‘Applicable savings bond’’ is defined as
a savings bond (1) which is more than
three years past its final maturity date,
(2) is in paper form, or is in paperless
or electronic form and there is no
designated bank account or routing
information or the designated bank
account or routing information is
incorrect; and (3) has not been
redeemed.4
1 Public Law 117–328 (Dec. 29, 2022), Division T;
31 U.S.C. 3105(f).
2 31 U.S.C. 3105(f)(1)(A).
3 31 U.S.C. 3105(f)(1)(C).
4 31 U.S.C. 3105(f)(6).
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The new subsection (f) expressly
limits the purpose for which a State may
use the information shared by Treasury
to locating the registered savings bond
owner. The statute provides: ‘‘Any State
that receives information described in
paragraph (1)(A) with respect to an
applicable savings bond may use such
information to locate the owner of such
bond pursuant to the same standards
and requirements as are applicable
under’’ State abandoned property rules
and any regulations or guidance
promulgated by Treasury pursuant to
the Secure 2.0 Act. 31 U.S.C. 3105(f)(4).
The Secure 2.0 Act does not override
the Treasury regulations described
above, which do not allow States to
escheat savings bonds that are not in
their possession.
The Secure 2.0 Act directs Treasury to
prescribe regulations or guidance as
may be necessary to carry out the
purposes of subsection (f), including
rules to protect the privacy of the
owners of applicable savings bonds,
prevent fraud, and ensure that any
information provided to a State is used
solely for the purposes of the new
subsection (f).5 Under the Secure 2.0
Act, regulations or guidance issued by
Treasury must not have the effect of
prohibiting, restricting, or otherwise
preventing a State from obtaining the
information described above, except as
deemed necessary to protect privacy or
prevent fraud or misuse of savings bond
information.6
II. Public Comments and Fiscal
Service’s Responses
On October 31, 2023, Fiscal Service
published a notice of proposed
rulemaking (NPRM) to carry out the
purposes of the Secure 2.0 Act.7 Fiscal
Service received 14 substantive
comment letters in response to the
NPRM. Twelve comments were from
State treasurers’ offices or their legal
representatives, one was a joint
comment from the National Association
of Unclaimed Property Administrators
(NAUPA) and the National Association
of State Treasurers (NAST), and one
comment was from a private individual.
The comments largely fell into four
general categories: (1) the restriction on
using shared information about savings
bonds to escheat those bonds, (2) the
lack of Congressional appropriations for
States to use in attempting to locate
savings bond owners, (3) the lack of a
claims servicing role for the States after
locating savings bond owners, and (4)
the prohibition on publicly releasing
5 31
U.S.C. 3105(f)(2)(A).
U.S.C. 3105(f)(2)(B).
7 88 FR 74386.
6 31
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savings bond information without the
express consent of Treasury. There were
also comments on certain other topics,
which we also address below.
Restriction on Using Shared Information
to Escheat Bonds
Eight commenters objected to the
proposed regulation’s restriction on
using the information shared by
Treasury under the Secure 2.0 Act to
escheat the applicable savings bonds.
According to those commenters, escheat
would be more efficient and cost
effective to unite the bond owners with
their property than the process outlined
in the proposed regulation. One
commenter also asserted that (1) the
regulations exceed Treasury’s statutory
authority by prohibiting escheat, (2)
denying escheatment to the States is
arbitrary and capricious, and (3)
prohibiting escheatment using
information obtained under the Secure
2.0 Act is a departure from Treasury’s
existing possession escheat policy.
These objections disregard the express
limitations that the Secure 2.0 Act
imposes on a State’s use of the
information shared pursuant to the
Secure 2.0 Act. As described above, the
Secure 2.0 Act only authorizes a State
to use the shared information for the
purpose of locating the bond owners.
Under the Secure 2.0 Act, ‘‘any State
that receives information [from
Treasury] with respect to an applicable
savings bond may use such information
to locate the owner of such bond.’’ 8 The
statute also requires Treasury to
prescribe regulations or guidance as
may be necessary to ‘‘ensure that any
information provided to a State under
[new subsection (f)] shall be used solely
to carry out the purposes of’’ that
subsection.9 By restricting the use of
information provided to a State under
these regulations, Treasury is
implementing the statute in accordance
with its express terms.
Further, the Secure 2.0 Act does not
override existing Treasury regulations
that prohibit a State from escheating a
bond that the State does not have in its
possession. Under regulations that
predate the Secure 2.0 Act, a matured
U.S. savings bond does not expire and
may be redeemed by the registered
owner (or heir) at any time. As the
Federal Circuit explained in LaTurner,
those Federal regulations preempt
inconsistent State law.
To the extent that commenters suggest
that the Secure 2.0 Act was intended to
override the LaTurner decision and
Treasury’s regulations by allowing
8 31
9 31
U.S.C. 3105(f)(4).
U.S.C. 3105(f)(2)(A).
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States to escheat matured, unredeemed
savings bonds that are not in their
possession, Treasury disagrees. In 2021,
proposed legislation that would have
had that effect was introduced in
Congress but never passed.10 The 2021
proposed legislation’s language
specifically would have allowed not
only for the transfer of applicable
savings bond information to the States
but would have allowed the States to
obtain title to the applicable savings
bond through a valid judgment of
escheatment. The 2021 proposed
legislation stated that
‘‘[n]otwithstanding any other Federal
law, the ownership of an applicable
savings bond may be transferred
pursuant to a valid judgment of
escheatment vesting a State with title to
the bond,’’ and that ‘‘[n]othing in this
section, or in any regulation
promulgated by the Secretary to
implement this section, may be
construed to preempt State law
providing for, or governing the
escheatment of, applicable savings
bonds.’’ 11 The 2021 proposed
legislation further stated that ‘‘[t]he
Secretary may not prescribe any
regulation which prevents or prohibits a
State from obtaining title to an
applicable savings bond or redeeming
such bond’’ under the act.12 However,
the 2021 proposed legislation failed to
move past the House Ways and Means
Committee and the Senate Finance
Committee. Instead, when a version of
the proposed legislation reemerged in
2022 as part of the Secure 2.0 Act, the
title-escheat language had been removed
along with the language prohibiting
Treasury from promulgating regulations
that would preempt State law on
escheatment.
Because U.S. savings bonds do not
expire and Treasury has imposed no
time limit for savings bond owners to
redeem them, savings bond information
shared with States under the Secure 2.0
Act does not pertain to savings bonds
that are abandoned or lost, but simply
unredeemed. The restriction in this final
rule on using information shared under
the Secure 2.0 Act to escheat savings
bonds serves to protect the bond
owner’s rights and to prevent future
double payments from Treasury when
the rightful owner presents the savings
bond for redemption. As Treasury has
previously explained, ‘‘[t]he potential
for competing claims exposes Treasury
to the risk of double-payment and costly
litigation, as well as threatens the vested
10 See Unclaimed Savings Bond Act of 2021, H.R.
4085, 117th Congress; S. 2854, 117th Congress.
11 Id. 3105(f)(1).
12 Id. 3105(f)(4)(B).
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rights of bond owners.’’ 80 FR 80259.
Under State escheatment laws, a State
could attempt to claim savings bonds
that are still in the possession of
registered owners, who can submit them
for payment at any time. A State could
also attempt to claim bonds that are in
the possession of another State, where
both States have a claim to title under
their own State laws. Allowing States to
escheat unredeemed savings bonds that
are not in the States’ possession would
be contrary to existing Treasury
regulations, as well as the agreement
made between Treasury and a bond
owner when the bond is purchased.
In providing that States may use the
information shared by Treasury to
‘‘locate the owner’’ of savings bonds
pursuant to the States’ abandoned
property rules and Treasury regulations
and guidance, the Secure 2.0 Act leaves
in place the balance Treasury has struck
to protect bond owners’ rights and the
public fisc. As discussed above, the
Secure 2.0 Act did not override the
LaTurner decision or override existing
Treasury regulations by allowing States
to escheat matured, unredeemed savings
bonds that are not in their possession.
Although several commenters
expressed a concern that the proposed
regulation could interfere with States’
ability to redeem bonds that are in their
possession, the Secure 2.0 Act and this
final rule address only bonds that are
not in a State’s physical possession.
Where a State has the physical bond, the
State has the serial number and other
information needed to ask Treasury—
under existing regulations unchanged
here—to redeem that bond. For similar
reasons, prohibiting title escheat using
information obtained under the Secure
2.0 Act is not a departure from
Treasury’s possession escheat policy,
which has long recognized that States
may be able to redeem bonds that are in
their physical possession under
circumstances that provide evidence
that the bonds were, in fact, abandoned
property.13 Under existing Treasury
regulations, States may request payment
on an escheat judgment purporting to
vest a State with title to a matured
savings bond in the State’s possession.14
Those existing regulations are not
affected by this final rule. This final rule
continues to support Treasury’s policy
requiring States to be in possession of
any savings bond they are purporting to
escheat. States may still pursue title
escheat for savings bonds in their
possession, as they would be using the
information found on the savings bond
itself to complete the escheatment
13 See
14 31
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80 FR 80260–61.
CFR 353.88.
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process, rather than using any
information provided to them by
Treasury under the Secure 2.0 Act.
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Lack of Congressional Appropriations
To Support States’ Location Services
Some commenters expressed concern
about the lack of Federal funding
available to assist the States in locating
savings bond owners. For example, one
commenter suggested that a lack of
funds will ‘‘hinder the resources States
have available to provide enhanced
outreach efforts beyond currently
established efforts.’’ Another noted that
‘‘certain challenges are created for
participating States by not actually
receiving the funds that are associated
with the bond records,’’ leaving the
States to bear the financial burden of
locator services.
However, the Secure 2.0 Act does not
grant funding to assist the States in
providing optional locator services. The
Secure 2.0 Act only directs Treasury to
make applicable savings bond
information available to the States for
the purpose of locating the owner or
owner’s representatives. In prior
litigation and in their comments on the
NPRM, multiple States have claimed
that they ‘‘have both the dedicated
resources and the solemn responsibility
to locate the missing property owners
and reunite them with their property,’’
Arkansas Brief at 6–7, LaTurner v.
United States, 933 F.3d 1354 (Fed. Cir.
2019) (No. 18–1509), ECF No. 37, and
have proclaimed that their ultimate goal
is to ‘‘help the original owners learn of,
and be paid on, th[eir] bonds,’’ Kansas
Brief at 14, LaTurner v. United States,
933 F.3d 1354 (Fed. Cir. 2019) (No. 18–
1509), ECF No. 36. States are free to use
their resources for such efforts, but
nothing in the Secure 2.0 Act requires
the States to undertake these
administrative efforts to locate bond
owners if a State chooses not to do so.
Lack of a Claims-Servicing Role
A number of commenters expressed a
concern regarding the lack of a ‘‘claims
servicing’’ role for States in the
proposed regulations. These comments
appear to propose that States—not
Treasury—should accept State-specific
property claim forms and require that
savings bond owners redeem their
bonds through the State’s unclaimed
property procedures rather than
Treasury’s savings bond redemption
procedures. Commenters raised
concerns about the efficiency and
effectiveness of the overall Secure 2.0
Act framework, stating that a
streamlined process to locate and pay
bond owners is essential. These
commenters indicated that Treasury
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should rely upon the States’ experience
in reuniting their respective citizens
with unclaimed funds, rather than
asking States to refer savings bond
owners to Treasury for redemption.
Another commenter noted that a State’s
role in the program is unclear if the
States do not provide the proceeds of
the savings bonds to their owners.
However, the Secure 2.0 Act does not
contemplate overriding the longstanding
Federal regulations, procedures, and
agreements under which individuals
redeem their U.S. savings bonds for
payment by the Federal Government.
Under existing Treasury regulations,
there is a well-established framework
for savings bond owners to redeem their
bonds.15 Any savings bond owner may
redeem a savings bond directly from
Fiscal Service, whether they have
physical possession of the bond or need
to declare the bond lost, stolen, or
destroyed. Fiscal Service also has
dedicated customer service staff trained
to process complex redemption
requests, which may include decedents’
estates, trusts, and attorneys-in-fact. All
necessary forms for redemption are
available to the public through the
TreasuryDirect.gov website.
Additionally, any bond owner who has
physical possession of a Series EE or
Series I savings bond, which is in a
single owner, co-ownership, or
beneficiary ownership registration, is
permitted to redeem the savings bond at
any financial institution designated by
Treasury as a paying agent. These two
methods of redemption, through Fiscal
Service and through designated paying
agents, promote efficient, consistent,
and reliable pathways to redemption for
savings bond owners. Under this final
rule, Treasury will continue to process
redemptions through established
methods.
Restriction on Public Release of Savings
Bond Information
Twelve commenters expressed
concern over the NPRM’s proposed
restriction of a State’s public release of
the applicable savings bond information
without Treasury’s express consent.
Commenters stated that this restriction
would place an increased administrative
burden on State agencies by preventing
them from using their current
reunification methods to reunite bond
owners with their bonds. The Secure 2.0
Act requires Treasury to issue
regulations or guidance as may be
necessary to ‘‘protect the privacy of the
owners of applicable savings bonds’’
and to ‘‘prevent fraud.’’ 16 In order to
balance the competing interests, rather
than adopting a blanket prohibition on
public release of relevant information,
the NPRM and the final rules permit the
public release of information by States
if they first obtain Treasury’s consent. In
determining whether to grant such
consent, Treasury will consider the risks
to savings bond owners’ privacy and the
risk of fraud. In recent years, as printing
technologies have advanced, it has
become easier for criminals to create
fraudulent paper savings bonds using
publicly available information. Since
2021, there have been over $40 million
in redemptions of counterfeit savings
bonds. Fiscal Service has responded by
taking certain steps that have reduced
the opportunities for fraud. By reducing
publicly available information and
taking other precautionary steps,
Treasury has significantly reduced the
number of counterfeit savings bonds
presented for redemption. Based on its
experience addressing fraud, Fiscal
Service believes that making records of
matured, unredeemed savings bonds
available to the public creates
substantial risks of fraud.
A few commenters stated that they
believe that some savings bond
information is already publicly
available; however, savings bond
records are not currently available to the
public. Moreover, savings bond
information is subject to the Privacy Act
of 1974, which generally prohibits the
release of such information to the
public. Fiscal Service further protects
this information in its Privacy Act
regulations,17 as well its Privacy Act
System of Records Notice Treasury/
Fiscal Service .014—United States
Securities and Access.18 Consistent with
Treasury’s obligation to protect savings
bond owners’ personal information, the
Treasury Hunt website restricts the
disclosure of savings bond information
and only suggests that a requestor
contact Fiscal Service to inquire further
about their Treasury securities; it does
not provide any specific information
regarding any securities that may be
held. Only after Fiscal Service verifies
the requestor’s identity will it release
any information to the owner as
permitted under the law and its
regulations.
Miscellaneous Comments
Treasury received comments
regarding what information will be
made available to the States under the
final rule. One commenter requested
17 31
CFR 323.2.
FR 11776, (Feb. 27, 2020). Fiscal Service
intends to modify this System of Records Notice to
assist in implementing the Secure 2.0 Act.
18 85
15 31
16 31
PO 00000
CFR 353.39, 31 CFR 360.39.
U.S.C. 3105(f)(2).
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102740 Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations
additional information on whether
Social Security numbers, savings bond
denominations, and serial numbers will
be released to the States. Another
commenter suggested that the release of
savings bond serial numbers is
mandatory under the Secure 2.0 Act.
Under the Secure 2.0 Act, Treasury is
required to provide each State, in digital
or other electronic form, with
information describing the name and
applicable address of a registered
owner, co-owner, or beneficiary of an
applicable savings bond with an
applicable address within that State.19
Accordingly, Treasury will release the
name and applicable address of such
registered owners, co-owners, and
beneficiaries to the States, pursuant to
the statute.
The final rule does not include
provisions for releasing Social Security
numbers, saving bond denominations,
or bond serial numbers. Based on
Treasury’s experience, the serial number
and Social Security number are the two
items of information most likely to
facilitate fraud. Further, the Secure 2.0
Act provides that the information
Treasury shares ‘‘may include the serial
number of any applicable savings
bond,’’ not that serial numbers must be
shared.20 In addition, in Treasury’s long
experience administering the savings
bond program, bond denominations
have marginal or no utility in locating
bond owners. Denominations and bond
serial numbers are important in the
redemption of a savings bond, but do
not offer Treasury or a participating
State information regarding the location
or identity of the savings bond owner.
One commentor submitted questions
regarding the contracting and
enforcement of information sharing with
the States. At this time, Fiscal Service
is working to develop a technical
solution for sharing the mandated
information with the States. Any
mandatory security requirements for
accessing the information will be
included in the information-sharing
contracts with the States. Fiscal Service
intends to work closely with the States
to ensure compliance with our security
requirements, monitoring the use of the
information in accordance with the
information-sharing contract.
under the Freedom of Information Act
(FOIA) regarding the disclosure of
records.21 Fiscal Service is maintaining
the current FOIA regulations found in
part 323 by moving the existing
provisions in §§ 323.1 through 323.5
into a new subpart A. A new subpart B
contains the regulations to implement
the Secure 2.0 Act requirements to
provide information and records
containing applicable savings bond
information to States. Subpart B
includes definitions necessary to
implement the regulations,
requirements for a State to receive
applicable savings bond information,
conditions regarding the use of the
information, and liability terms.
Separating the regulations
implementing the two different
statutory authorities, FOIA and the
Secure 2.0 Act, by subpart is intended
to assist the public in identifying the
two separate authorities under which an
individual or a State may request
information.
Treasury believes the new disclosure
of applicable savings bond information
requirements is closely associated with
the purpose of FOIA and its existing
disclosure regulations. While the Secure
2.0 Act only allows for disclosure of
certain information to States, rather than
to the public at large, a savings bond
owner could look to a single regulation,
part 323, to determine the various ways
in which their savings bond information
could be disclosed.
III. Summary of Final Rule
Amendments
Rules Governing Sharing of Applicable
Savings Bond Information With States,
§ 323.11
Section 323.11 includes the
definitions and terms necessary to
provide States the information required
by the Secure 2.0 Act. In addition, the
Overview
Fiscal Service is adding these Secure
2.0 Act regulations to 31 CFR part 323,
which includes regulations adopted
19 31
U.S.C. 3105(f)(1)(A).
31 U.S.C. 3105(f)(1)(B).
20 See
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15:22 Dec 17, 2024
Subpart A, § 323.1
As noted above, subpart A as
amended contains regulations that
implement FOIA for Fiscal Service,
previously found at part 323.
Accordingly, the final rule makes a
technical modification to the first
sentence of § 323.1 to identify ‘‘this
subpart’’ rather than ‘‘this part.’’
Subpart B
Following are summaries of the
provisions in the new subpart B, all of
which are being added in this final rule.
Purpose of the Regulations, § 323.10
This section briefly describes the
purpose of the new regulatory
provisions, namely to implement the
Secure 2.0 Act.
21 31
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CFR part 323.
Frm 00066
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amendments add new provisions to
help protect the privacy of the owners
of applicable savings bonds, prevent
fraud, and ensure that shared
information is used only for permissible
purposes under the Secure 2.0 Act.
Definitions, § 323.11(a)
The Secure 2.0 Act requires Treasury
to provide, in digital or other electronic
form, each State with information
describing any ‘‘applicable savings
bond’’ that has an ‘‘applicable address’’
within such State. The statute requires
this information to include the name
and applicable address for each
registered owner, co-owner, or
beneficiary. ‘‘Applicable address’’ is
defined in the statute as the registered
address for the registered owner, coowner, or beneficiary of the savings
bond or the last-known address for the
foregoing if it is available to Treasury.22
The final rule defines ‘‘last-known
address’’ to mean an address available
to Fiscal Service after a reasonable
search of its records.
While the level of effort dedicated to
the search could be expressed in various
degrees, a ‘‘reasonable’’ search balances
the goals of efficiency and effectiveness.
An exhaustive search, for example,
would be unduly costly and
burdensome on Fiscal Service, given the
breadth of our systems of records, and
unlikely to significantly change the
results of the search. ‘‘Record’’ is
broadly defined to include any data or
documentation containing or composed
of information describing relevant
applicable savings bonds, including the
applicable addresses of the owners. This
definition allows Fiscal Service to
protect savings bond owners from
unauthorized disclosure of their
information, as any information
received from Treasury will remain a
record subsequent to disclosure.
The term ‘‘State’’ is also broadly
defined in the final rule to mean U.S.
territories, possessions, and the District
of Columbia, as well as the 50 States.
This definition is consistent with
available registered addresses over the
lifetime of the savings bond program.
Requests for Records
Section 323.11(b) provides that each
State may request applicable savings
bond records from Fiscal Service. Upon
request, the State must enter into an
information-sharing agreement with
Fiscal Service to receive the requested
records. Fiscal Service expects that this
agreement will require a State to make
representations regarding protecting the
savings bond records from unauthorized
22 31
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Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations 102741
disclosure, including security
requirements for receiving and storing
the records. These security requirements
are appropriate to minimize the risk of
fraud or misuse or misappropriation of
information.
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Use of Records
Section 323.11(c) specifies how the
records or information contained
therein may be used by States, in
compliance with the Secure 2.0 Act. As
stated at 31 U.S.C. 3105(f), Treasury’s
regulations are required to ensure that
applicable savings bond information
provided to a State will be used solely
to carry out the purpose of locating the
owner of the savings bond.23 In
accordance with this statutory
requirement, the regulation provides
that the applicable savings bond
information cannot be used to escheat
savings bond ownership to a State. The
purpose of the Secure 2.0 Act is for
Treasury to provide information
regarding applicable savings bonds to
States to assist in locating the owner of
the bonds. The Secure 2.0 Act does not
allow States to use the provided records
and information to escheat the bonds,
which would conflict with the rights of
savings bond owners to redeem matured
savings bonds whenever they choose.
Under the regulation, in order to
protect the savings bond owner’s
privacy, any applicable savings bond
information provided to States cannot
be released to the public or any third
party without Treasury’s express written
approval. This requirement is also
expected to be incorporated into the
information-sharing agreement
described above. The requirement to
obtain such approval from Treasury is
also intended to ensure that the release
of savings bond records or the
information therein does not subject
Fiscal Service customers to fraud risk.
In recent years, Fiscal Service has taken
steps that have reduced the
opportunities for fraud, and making
records of matured, unredeemed savings
bonds available to the public would
create an unacceptable risk of fraud.
Fiscal Service will continue to monitor
savings bond fraud and consider
implementing further risk-mitigation
strategies, which may eventually allow
for certain savings bond records to be
distributed publicly.
Liability
Under § 323.11(d), Treasury will not
be responsible for any loss, liability,
cost, or expense that results from a
State’s receipt, use, or distribution of
records regarding applicable savings
23 31
U.S.C. 3105(f)(2).
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15:22 Dec 17, 2024
bonds or any information contained
therein. Any misuse of savings bond
records or information provided to a
State under the regulations could result
in fraudulent activity, breach of privacy
for a savings bond owner, and financial
loss for bond owners. Under the
regulations, a State that receives
information under the regulations bears
the responsibility for, and indemnifies
Treasury against, any loss or other costs
associated with the State’s receipt, use,
distribution of, or failure to adequately
protect, any records or information.
Severability, § 323.12
This provision clarifies Treasury’s
intent with respect to the severability of
provisions of this rule. In the event any
section, subsection, clause, paragraph,
or phrase of this subpart is deemed
invalid or unconstitutional by a court of
competent jurisdiction, all remaining
provisions shall continue in effect.
IV. Procedural Requirements
A. Executive Order 12866
This rule is not a significant
regulatory action as defined in E.O.
12866, dated September 30, 1993, as
amended, and is not a major rule under
5 U.S.C. 804.
B. Administrative Procedure Act (APA)
Because this rule relates to United
States securities, which are contracts
between Treasury and the owner of the
security, this rule falls within the
contract exception to the APA, 5 U.S.C.
553(a)(2). Treasury voluntarily sought
public comment to assist the agency in
assessing the impact of the rule.
C. Regulatory Flexibility Act
This rule relates to matters of public
contract and procedures for United
States securities. Since a notice of
proposed rulemaking is not required,
the provisions of the Regulatory
Flexibility Act, 5 U.S.C. 601 et seq., do
not apply. In any event, Treasury
certifies that this rule, which
implements the Secure 2.0 Act’s
requirements that Treasury provide
certain U.S. savings bond information to
States, will not have a significant
economic impact on a substantial
number of small entities.24
D. Paperwork Reduction Act
The provisions of the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq.,
and its implementing regulations, 5 CFR
part 1320, do not apply to this rule
because there are no new or revised
recordkeeping or reporting
requirements.
24 5
Jkt 265001
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U.S.C. 605(b).
Frm 00067
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List of Subjects in 31 CFR Part 323
Archives and records, Freedom of
information, Privacy, Savings bonds.
Accordingly, for the reasons set forth
in the preamble, Treasury amends 31
CFR part 323, as follows:
PART 323—DISCLOSURE OF
RECORDS
1. 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.
■
2. Add subpart A to read as follows:
Subpart A—Freedom of Information
Act
§§ 323.1 through 323.5
Subpart A]
[Designated as
3. Designate §§ 323.1 through 323.5 as
subpart A.
■ 4. Revise the first sentence of § 323.1
to read as follows:
■
§ 323.1
Purpose of regulations.
The regulations of this subpart are
issued to implement 5 U.S.C. 552(a)–(2)
and (3). * * *
■ 5. Add subpart B to read as follows:
Subpart B—SECURE 2.0 Act of 2022
Sec.
323.10 Purpose of this subpart.
323.11 Rules governing sharing of
applicable savings bond information
with States.
323.12 Severability.
Authority: 31 U.S.C. 3105(f).
Subpart B—SECURE 2.0 Act of 2022
§ 323.10
Purpose of this subpart.
The regulations of this subpart are
issued to implement section 122 of the
SECURE 2.0 Act of 2022, 31 U.S.C.
3105(f). The requirements of 31 U.S.C.
3105(f) are additionally met through the
publication of a new Routine Use in the
applicable Fiscal Service System of
Record Notice.
§ 323.11 Rules governing sharing of
applicable savings bond information with
States.
(a) Definitions. For purposes of this
section:
Applicable address has the meaning
set forth in 31 U.S.C. 3105(f)(1)(C).
Applicable savings bond has the
meaning set forth in 31 U.S.C.
3105(f)(6).
Last known address means the full
street address, if available, found after a
reasonable search of Fiscal Service
records.
Name means the full registered name
of the owner, co-owner, or beneficiary of
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102742 Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations
an applicable savings bond, as it
appears on the savings bond inscription.
Record means data or documentation,
whether in paper, digital, or other
electronic form, containing or composed
of information describing any applicable
savings bond which has an applicable
address within a State, including the
name and registered address or last
known address of the registered owner,
co-owner, or beneficiary, as further
defined in 31 U.S.C. 3105(f)(1).
Registered address means the address
included in the savings bond
inscription.
State means the fifty States, the
District of Columbia, American Samoa,
the Federated States of Micronesia,
Guam, the United States Virgin Islands,
the Marshall Islands, the
Commonwealth of the Northern Mariana
Islands, Palau, and the Commonwealth
of Puerto Rico.
(b) Requests for records. Records will
be made available to States in
compliance with 31 U.S.C. 3105(f) and
this subpart, upon request by a State to
Fiscal Service. Prior to receiving access
to records, each State, through an
authorized State representative, must
enter into an information-sharing
agreement with Fiscal Service using a
form that will be provided by Fiscal
Service. Such agreements may contain,
among other things, requirements that
Treasury deems necessary or
appropriate to ensure the security of the
information.
(c) Use of records. Any records or any
information made available to a State
under this subpart:
(1) Must be used only for the purpose
of locating the owner of an applicable
savings bond;
(2) Must not be used to escheat
savings bond ownership to a State; and
(3) Must not be released by a State to
the public or any third party, unless
explicitly approved in writing, in
advance, by Treasury.
(d) Liability. Treasury is not liable for
any loss, liability, cost, or expense that
may result from a State’s receipt, use, or
distribution of records or any
information contained therein. A State
receiving records under this subpart
shall indemnify Treasury for any loss,
liability, cost, or expense associated
with the State’s receipt, use, or
distribution of, or failure to adequately
protect, records or any information
contained therein.
§ 323.12
Severability.
The provisions of this subpart are
severable, and if any section,
subsection, clause, paragraph, or phrase
of this subpart shall be adjudged to be
invalid or unconstitutional by any court
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15:22 Dec 17, 2024
Jkt 265001
of competent jurisdiction, the judgment
shall not affect, impair, or invalidate the
remainder of this subpart, but shall be
confined in its operation to the section,
subsection, clause, paragraph, or phrase
directly involved in the controversy in
which such judgment shall have been
rendered, and the remainder of this
subpart shall continue to be in force and
effect.
By the Department of the Treasury.
David Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2024–29988 Filed 12–17–24; 8:45 am]
BILLING CODE P
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 587
Publication of Russian Harmful
Foreign Activities Sanctions
Regulations Web General Licenses
53A, 55C, 113, and 114
Office of Foreign Assets
Control, Treasury.
ACTION: Publication of web general
licenses.
AGENCY:
The Department of the
Treasury’s Office of Foreign Assets
Control (OFAC) is publishing four
general licenses (GLs) issued pursuant
to the Russian Harmful Foreign
Activities Sanctions Regulations: GLs
53A, 55C, 113, and 114, each of which
was previously made available on
OFAC’s website.
DATES: GLs 53A, 55C, 113, and 114 were
issued on November 21, 2024. See
SUPPLEMENTARY INFORMATION for
additional relevant dates.
FOR FURTHER INFORMATION CONTACT:
OFAC: Assistant Director for Licensing,
202–622–2480; Assistant Director for
Regulatory Affairs, 202–622–4855; or
Assistant Director for Compliance, 202–
622–2490 or https://ofac.treasury.gov/
contact-ofac.
SUPPLEMENTARY INFORMATION:
SUMMARY:
Electronic Availability
This document and additional
information concerning OFAC are
available on OFAC’s website: https://
ofac.treasury.gov/.
Background
On November 21, 2024, OFAC issued
GLs 53A, 55C, 113, and 114 to authorize
certain transactions otherwise
prohibited by the Russian Harmful
Foreign Activities Sanctions
Regulations, 31 CFR part 587. Each GL
was made available on OFAC’s website
PO 00000
Frm 00068
Fmt 4700
Sfmt 4700
(https://ofac.treasury.gov) when it was
issued. GL 53A replaced and
superseded GL 53. GL 55C replaced and
superseded GL 55B. GL 55C has an
expiration date of June 28, 2025; GLs
113 and 114 each have an expiration
date of December 20, 2024. The text of
these GL is provided below.
OFFICE OF FOREIGN ASSETS
CONTROL
Russian Harmful Foreign Activities
Sanctions Regulations 31 CFR Part 587
GENERAL LICENSE NO. 53A
Authorizing Transactions for
Diplomatic Missions of the Russian
Federation Involving Gazprombank
Joint Stock Company or Prohibited by
Directive 4 Under Executive Order
14024
(a) Except as provided in paragraph
(c) of this general license, U.S. persons
are authorized to engage in all
transactions ordinarily incident and
necessary to the official business of
diplomatic or consular missions of the
Government of the Russian Federation
(‘‘Russian missions’’) that are prohibited
by Executive Order (E.O.) 14024 and
involve Gazprombank Joint Stock
Company (Gazprombank), or any entity
in which Gazprombank owns, directly
or indirectly, a 50 percent or greater
interest, or are prohibited by Directive 4
under E.O. 14024, Prohibitions Related
to Transactions Involving the Central
Bank of the Russian Federation, the
National Wealth Fund of the Russian
Federation, and the Ministry of Finance
of the Russian Federation.
(b) Except as provided in paragraph
(c) of this general license, U.S. persons
are authorized to engage in all
transactions ordinarily incident and
necessary to the compensation of
employees of Russian missions,
including payment of salaries and
reimbursement of expenses, that are
prohibited by E.O. 14024 and involve
Gazprombank, or any entity in which
Gazprombank owns, directly or
indirectly, a 50 percent or greater
interest, or are prohibited by Directive 4
under E.O. 14024.
(c) This general license does not
authorize:
(1) Any transactions prohibited by
Directive 2 under E.O. 14024,
Prohibitions Related to Correspondent
or Payable-Through Accounts and
Processing of Transactions Involving
Certain Foreign Financial Institutions;
(2) Any debit to an account on the
books of a U.S. financial institution of
the Central Bank of the Russian
Federation, the National Wealth Fund of
the Russian Federation, or the Ministry
of Finance of the Russian Federation; or
E:\FR\FM\18DER1.SGM
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]]>Agencies
- DEPARTMENT OF THE TREASURY
- Bureau of the Fiscal Service
[Federal Register Volume 89, Number 243 (Wednesday, December 18, 2024)]
[Rules and Regulations]
[Pages 102735-102742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29988]
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DEPARTMENT OF THE TREASURY
Bureau of the Fiscal Service
31 CFR Part 323
[FISCAL-2023-0002]
RIN 1530-AA28
Disclosure of Records
AGENCY: Bureau of the Fiscal Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: The Bureau of the Fiscal Service (Fiscal Service) within the
[[Page 102736]]
Department of the Treasury (Treasury) is issuing regulations to
implement statutory requirements under the SECURE 2.0 Act of 2022 that
require Treasury to provide certain U.S. savings bond information to
States. A State receiving the information with respect to an applicable
savings bond may use the information to locate the owner of the bond
pursuant to Treasury's regulations and the State's own standards and
requirements under abandoned property rules and regulations of the
State. Under the SECURE 2.0 Act of 2022, Treasury is required to issue
regulations or guidance to protect the privacy of savings bond owners,
prevent fraud, and ensure that information disclosed to a State is used
solely to locate savings bond owners.
DATES: This rule is effective December 18, 2024.
FOR FURTHER INFORMATION CONTACT: Marcia Goodnight, Retail Securities
Services, at [email protected]; or
Lela Anderson, Attorney-Advisor, at 304-480-8692.
SUPPLEMENTARY INFORMATION:
I. Background
The U.S. Department of the Treasury has issued savings bonds since
1935 on the credit of the United States to raise funds for Federal
programs and operations. Article 8, Section 8, Clause 2 of the
Constitution authorizes the Federal Government to ``borrow money on the
credit of the United States.'' Under this grant of power, ``Congress
authorized the Secretary of the Treasury, with the approval of the
President, to issue savings bonds in such form and under such
conditions as he may from time to time prescribe.'' Free v. Bland, 369
U.S. 663, 667 (1962) (citing the predecessor to 31 U.S.C. 3105).
Congress provided that the proceeds of savings bonds may be used by the
Federal Government for any expenditures authorized by law. See 31
U.S.C. 3105(a).
Congress expressly authorized the Secretary of the Treasury to
establish the terms and conditions that govern the savings bond
program. 31 U.S.C. 3105(c). Treasury's implementing regulations set
forth ``a contract between the United States and savings bond
purchasers,'' giving ``purchasers confidence that the United States
will honor its debts when a purchaser surrenders a savings bond for
payment'' and protecting ``the public fisc by ensuring that Treasury
does not face multiple claims for payment on a single savings bond.''
80 FR 80258 (Dec. 24, 2015). In general, savings bonds are not
transferrable and are payable only to the registered owner, except as
described in Treasury regulations detailing when payment will be made
to a person or entity that is not the registered owner. See 31 CFR
315.15, 353.15, and 360.15.
To redeem a paper savings bond, the registered owner or a successor
specified in the regulations must surrender the physical bond. See 31
CFR 353.35. Although there are exceptions to this surrender
requirement, the exceptions are ``carefully drawn to protect the
owner's rights and to protect Treasury against competing claims.'' 80
FR 80258. For example, if a claimant cannot surrender the bond, the
claimant must provide satisfactory evidence of the loss, theft, or
destruction of the bond, or a satisfactory explanation of the
mutilation or defacement, as well as sufficient information to identify
the bond by serial number. See, e.g., 31 CFR parts 315 and 353, subpart
F. Pursuant to express statutory authority, Treasury regulations allow
owners to keep their bonds indefinitely and to surrender them for
payment at any time after the bonds mature. See 31 U.S.C. 3105(b) and
31 CFR parts 315 and 353, subpart H.
Litigation Over State Escheat Claims
Many State escheat laws allow States to take custody of unclaimed
or abandoned property. Treasury discussed the effect of escheat on the
rights of savings bond owners in a 1952 bulletin to the Federal Reserve
Banks addressing a State claim to the custody of four savings bonds in
the State's possession, which had belonged to a ward of the State who
died without heirs. In this context, where the State had possession of
the bonds it sought to redeem, Treasury stated that it will not
recognize a State claim to the custody of savings bonds, but will
recognize an escheat judgment that confers title on a State because
``in escheat the state is `the ultimate heir.' '' 80 FR 80258 (quoting
Public Debt Bulletin No. 111, Subject: State Statutes Concerning
Abandoned Property (Feb. 27, 1952) at 3). It was unnecessary for the
1952 bulletin to provide further detail about State escheat claims
because in that case the State did not claim title over the bonds. Id.
Treasury addressed a new, broader custody escheat claim in 2004 and
2006, when several States attempted to claim the proceeds of all
matured, unredeemed bonds registered to residents in their State.
Unlike the claim addressed by the 1952 bulletin, these States did not
possess the bonds they sought to redeem, which presumably were still
held by their owners. Treasury informed the States that they ``must
possess the bonds they seek to redeem.'' 80 FR 20259 & n.3 (citing 2004
and 2006 letters to various States). In the ensuing litigation, the
U.S. Court of Appeals for the Third Circuit concluded that the State
unclaimed property statutes conflicted with Federal law. See New Jersey
v. U.S. Dep't of the Treasury, 684 F.3d 382, 407-09 (3d Cir. 2012),
cert. denied, 569 U.S. 1004 (2013). The States' ``efforts to impose the
status of `abandoned' or `unclaimed' on the Federal Government's
obligations'' could not be reconciled with the fact that the bond
proceeds are not `abandoned' or `unclaimed' under Federal law because
the owners of the bonds may redeem them at any time after they
mature.'' Id. at 409.
Subsequent litigation was prompted by certain States enacting title
escheat laws specifically for savings bonds that the States deemed to
be ``unclaimed'' or ``abandoned.'' In 2000 and 2015, respectively,
Kansas and Arkansas enacted statutes providing that a U.S. savings bond
is presumed to be abandoned if it has not been redeemed by a certain
time and further providing that such bonds escheat to the State a
certain time after the bonds are presumed abandoned. See 80 FR 80259.
Pursuant to those laws, Kansas and Arkansas initiated escheat
proceedings to claim title to bonds in their possession, as well as to
a broad class of bonds the States did not possess. With respect to the
bonds not in their possession, Kansas and Arkansas published statements
in local newspapers of their intention to claim title to bonds of a
particular description. Although bond owners were not parties to the
escheat proceeding, and may never have learned that the State was
attempting to claim title over their bonds, they were obligated to
respond to the escheat proceeding in order to protect their ownership
of the bonds. Id. After obtaining ex parte escheat judgments, Kansas
and Arkansas sought to redeem the savings bonds not in their
possession. Treasury denied those requests.
The U.S. Court of Appeals for the Federal Circuit upheld Treasury's
decision for two independent reasons. First, the Court of Appeals held
that ``federal law preempts the States' escheat laws.'' LaTurner v.
United States, 933 F.3d 1354, 1357 (Fed. Cir. 2019), cert. denied, 141
S. Ct. 239 (2020). The court explained that, whereas ``Treasury
regulations impose no time limit on the redemption of savings bonds,''
the State laws provide
[[Page 102737]]
that, ``if bond holders do not redeem their bonds promptly enough (as
decided by the States), they lose ownership and the bonds will transfer
to the state.'' Id. at 1361. The court determined that, because
``federal law takes precedence,'' id. (quoting Murphy v. National
Collegiate Athletic Ass'n, 584 U.S. 453, 477 (2018)), ``the bonds
belong to the original bond owners, not the States, and thus the States
cannot redeem the bonds,'' id. at 1357.
Second, the Court of Appeals held that, ``even if the States owned
the bonds, they could not obtain any greater rights than the original
bond owners,'' and Treasury's regulations make clear that ``a bond
owner must provide the serial number to redeem'' the specific bonds at
issue. LaTurner, 933 F.3d at 1357. The court observed that ``the States
do not have the physical bonds or the bond serial numbers.'' Id. The
court therefore determined that, ``even if the bonds here are
considered lost,'' id. at 1364, ``Treasury properly denied [the
States'] request for redemption,'' id. at 1357. The court also
concluded that the States could not ``circumvent the [regulatory]
requirement'' to ``provide the serial number'' of the bonds by asking
``the government to disclose the bond serial numbers as a matter of
discovery.'' Id. at 1366. The Court of Appeals denied the States'
petitions for rehearing en banc, and the Supreme Court denied the
States' petitions for writs of certiorari. LaTurner v. United States,
141 S. Ct. 239 (2020); Lea v. United States, 141 S. Ct. 240 (2020).
While that litigation was ongoing, Treasury amended its regulations
in 2015 through notice-and-comment rulemaking to clarify that it ``will
not recognize an escheat judgment that purports to vest a State with
title to a bond that the State does not possess.'' 31 CFR 315.88(a);
see also 31 CFR 315.20(b) (``Escheat proceedings will not be recognized
under this subpart.''), 80 FR 80264-65. In a separate suit filed in
Federal district court, Kansas and four other States challenged the
amended regulations as an allegedly unjustified departure from
Treasury's past practice. The district court rejected that challenge,
concluding that the regulations clarified rather than changed
Treasury's practice. See Estes v. U.S. Dep't of the Treasury, 219 F.
Supp. 3d 17, 22 (D.D.C. 2016). The States appealed but voluntarily
dismissed the appeal. See Order, LaTurner v. U.S. Dep't of the
Treasury, No. 17-5015 (D.C. Cir. Nov. 21, 2017).
Thus, under 31 U.S.C. 3105 and Treasury's implementing regulations,
U.S. savings bond owners are entitled to redeem their bonds at any time
after maturity without penalty; the United States honors those debts in
perpetuity. See 31 CFR 353.35. State laws that treat matured but not
yet redeemed U.S. savings bonds that are not in a State's possession as
``abandoned'' property subject to escheatment undermine the rights of
registered owners or their heirs to redeem matured bonds whenever they
choose through the simple act of turning in the physical bonds to a
designated payor such as a local bank. Treasury's existing regulations
preempt any State law that deems U.S. savings bonds ``abandoned''
because they are not yet redeemed or otherwise interferes with the
Federal-law rights of the registered owners or their heirs to redeem
them.
SECURE 2.0 Act of 2022
Against that backdrop, Congress considered legislation to amend 31
U.S.C. 3105. As discussed further below, Congress declined to enact a
2021 legislative proposal that would have allowed States to escheat
matured, unredeemed savings bonds that are not in their possession.
Instead, Congress enacted the SECURE 2.0 Act of 2022 \1\ (Secure 2.0
Act), which was signed into law on December 29, 2022.
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\1\ Public Law 117-328 (Dec. 29, 2022), Division T; 31 U.S.C.
3105(f).
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The Secure 2.0 Act added subsection (f) to 31 U.S.C. 3105,
requiring Treasury to share certain U.S. savings bond information with
States for the purpose of locating savings bond owners. Under new
subsection (f), Treasury ``shall provide each State, in digital or
other electronic form, with information describing any applicable
savings bond which has an applicable address that is within such State,
including (i) the name and applicable address of the registered owner;
and (ii) the name and applicable address of any registered co-owner or
beneficiary.'' \2\ ``Applicable address'' is defined as the registered
address for the registered owner (or co-owner or beneficiary) of the
savings bond or the last-known address for the registered owner (or co-
owner or beneficiary) available to the Secretary.\3\ ``Applicable
savings bond'' is defined as a savings bond (1) which is more than
three years past its final maturity date, (2) is in paper form, or is
in paperless or electronic form and there is no designated bank account
or routing information or the designated bank account or routing
information is incorrect; and (3) has not been redeemed.\4\
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\2\ 31 U.S.C. 3105(f)(1)(A).
\3\ 31 U.S.C. 3105(f)(1)(C).
\4\ 31 U.S.C. 3105(f)(6).
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The new subsection (f) expressly limits the purpose for which a
State may use the information shared by Treasury to locating the
registered savings bond owner. The statute provides: ``Any State that
receives information described in paragraph (1)(A) with respect to an
applicable savings bond may use such information to locate the owner of
such bond pursuant to the same standards and requirements as are
applicable under'' State abandoned property rules and any regulations
or guidance promulgated by Treasury pursuant to the Secure 2.0 Act. 31
U.S.C. 3105(f)(4). The Secure 2.0 Act does not override the Treasury
regulations described above, which do not allow States to escheat
savings bonds that are not in their possession.
The Secure 2.0 Act directs Treasury to prescribe regulations or
guidance as may be necessary to carry out the purposes of subsection
(f), including rules to protect the privacy of the owners of applicable
savings bonds, prevent fraud, and ensure that any information provided
to a State is used solely for the purposes of the new subsection
(f).\5\ Under the Secure 2.0 Act, regulations or guidance issued by
Treasury must not have the effect of prohibiting, restricting, or
otherwise preventing a State from obtaining the information described
above, except as deemed necessary to protect privacy or prevent fraud
or misuse of savings bond information.\6\
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\5\ 31 U.S.C. 3105(f)(2)(A).
\6\ 31 U.S.C. 3105(f)(2)(B).
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II. Public Comments and Fiscal Service's Responses
On October 31, 2023, Fiscal Service published a notice of proposed
rulemaking (NPRM) to carry out the purposes of the Secure 2.0 Act.\7\
Fiscal Service received 14 substantive comment letters in response to
the NPRM. Twelve comments were from State treasurers' offices or their
legal representatives, one was a joint comment from the National
Association of Unclaimed Property Administrators (NAUPA) and the
National Association of State Treasurers (NAST), and one comment was
from a private individual. The comments largely fell into four general
categories: (1) the restriction on using shared information about
savings bonds to escheat those bonds, (2) the lack of Congressional
appropriations for States to use in attempting to locate savings bond
owners, (3) the lack of a claims servicing role for the States after
locating savings bond owners, and (4) the prohibition on publicly
releasing
[[Page 102738]]
savings bond information without the express consent of Treasury. There
were also comments on certain other topics, which we also address
below.
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\7\ 88 FR 74386.
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Restriction on Using Shared Information to Escheat Bonds
Eight commenters objected to the proposed regulation's restriction
on using the information shared by Treasury under the Secure 2.0 Act to
escheat the applicable savings bonds. According to those commenters,
escheat would be more efficient and cost effective to unite the bond
owners with their property than the process outlined in the proposed
regulation. One commenter also asserted that (1) the regulations exceed
Treasury's statutory authority by prohibiting escheat, (2) denying
escheatment to the States is arbitrary and capricious, and (3)
prohibiting escheatment using information obtained under the Secure 2.0
Act is a departure from Treasury's existing possession escheat policy.
These objections disregard the express limitations that the Secure
2.0 Act imposes on a State's use of the information shared pursuant to
the Secure 2.0 Act. As described above, the Secure 2.0 Act only
authorizes a State to use the shared information for the purpose of
locating the bond owners. Under the Secure 2.0 Act, ``any State that
receives information [from Treasury] with respect to an applicable
savings bond may use such information to locate the owner of such
bond.'' \8\ The statute also requires Treasury to prescribe regulations
or guidance as may be necessary to ``ensure that any information
provided to a State under [new subsection (f)] shall be used solely to
carry out the purposes of'' that subsection.\9\ By restricting the use
of information provided to a State under these regulations, Treasury is
implementing the statute in accordance with its express terms.
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\8\ 31 U.S.C. 3105(f)(4).
\9\ 31 U.S.C. 3105(f)(2)(A).
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Further, the Secure 2.0 Act does not override existing Treasury
regulations that prohibit a State from escheating a bond that the State
does not have in its possession. Under regulations that predate the
Secure 2.0 Act, a matured U.S. savings bond does not expire and may be
redeemed by the registered owner (or heir) at any time. As the Federal
Circuit explained in LaTurner, those Federal regulations preempt
inconsistent State law.
To the extent that commenters suggest that the Secure 2.0 Act was
intended to override the LaTurner decision and Treasury's regulations
by allowing States to escheat matured, unredeemed savings bonds that
are not in their possession, Treasury disagrees. In 2021, proposed
legislation that would have had that effect was introduced in Congress
but never passed.\10\ The 2021 proposed legislation's language
specifically would have allowed not only for the transfer of applicable
savings bond information to the States but would have allowed the
States to obtain title to the applicable savings bond through a valid
judgment of escheatment. The 2021 proposed legislation stated that
``[n]otwithstanding any other Federal law, the ownership of an
applicable savings bond may be transferred pursuant to a valid judgment
of escheatment vesting a State with title to the bond,'' and that
``[n]othing in this section, or in any regulation promulgated by the
Secretary to implement this section, may be construed to preempt State
law providing for, or governing the escheatment of, applicable savings
bonds.'' \11\ The 2021 proposed legislation further stated that ``[t]he
Secretary may not prescribe any regulation which prevents or prohibits
a State from obtaining title to an applicable savings bond or redeeming
such bond'' under the act.\12\ However, the 2021 proposed legislation
failed to move past the House Ways and Means Committee and the Senate
Finance Committee. Instead, when a version of the proposed legislation
reemerged in 2022 as part of the Secure 2.0 Act, the title-escheat
language had been removed along with the language prohibiting Treasury
from promulgating regulations that would preempt State law on
escheatment.
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\10\ See Unclaimed Savings Bond Act of 2021, H.R. 4085, 117th
Congress; S. 2854, 117th Congress.
\11\ Id. 3105(f)(1).
\12\ Id. 3105(f)(4)(B).
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Because U.S. savings bonds do not expire and Treasury has imposed
no time limit for savings bond owners to redeem them, savings bond
information shared with States under the Secure 2.0 Act does not
pertain to savings bonds that are abandoned or lost, but simply
unredeemed. The restriction in this final rule on using information
shared under the Secure 2.0 Act to escheat savings bonds serves to
protect the bond owner's rights and to prevent future double payments
from Treasury when the rightful owner presents the savings bond for
redemption. As Treasury has previously explained, ``[t]he potential for
competing claims exposes Treasury to the risk of double-payment and
costly litigation, as well as threatens the vested rights of bond
owners.'' 80 FR 80259. Under State escheatment laws, a State could
attempt to claim savings bonds that are still in the possession of
registered owners, who can submit them for payment at any time. A State
could also attempt to claim bonds that are in the possession of another
State, where both States have a claim to title under their own State
laws. Allowing States to escheat unredeemed savings bonds that are not
in the States' possession would be contrary to existing Treasury
regulations, as well as the agreement made between Treasury and a bond
owner when the bond is purchased.
In providing that States may use the information shared by Treasury
to ``locate the owner'' of savings bonds pursuant to the States'
abandoned property rules and Treasury regulations and guidance, the
Secure 2.0 Act leaves in place the balance Treasury has struck to
protect bond owners' rights and the public fisc. As discussed above,
the Secure 2.0 Act did not override the LaTurner decision or override
existing Treasury regulations by allowing States to escheat matured,
unredeemed savings bonds that are not in their possession.
Although several commenters expressed a concern that the proposed
regulation could interfere with States' ability to redeem bonds that
are in their possession, the Secure 2.0 Act and this final rule address
only bonds that are not in a State's physical possession. Where a State
has the physical bond, the State has the serial number and other
information needed to ask Treasury--under existing regulations
unchanged here--to redeem that bond. For similar reasons, prohibiting
title escheat using information obtained under the Secure 2.0 Act is
not a departure from Treasury's possession escheat policy, which has
long recognized that States may be able to redeem bonds that are in
their physical possession under circumstances that provide evidence
that the bonds were, in fact, abandoned property.\13\ Under existing
Treasury regulations, States may request payment on an escheat judgment
purporting to vest a State with title to a matured savings bond in the
State's possession.\14\ Those existing regulations are not affected by
this final rule. This final rule continues to support Treasury's policy
requiring States to be in possession of any savings bond they are
purporting to escheat. States may still pursue title escheat for
savings bonds in their possession, as they would be using the
information found on the savings bond itself to complete the
escheatment
[[Page 102739]]
process, rather than using any information provided to them by Treasury
under the Secure 2.0 Act.
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\13\ See 80 FR 80260-61.
\14\ 31 CFR 353.88.
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Lack of Congressional Appropriations To Support States' Location
Services
Some commenters expressed concern about the lack of Federal funding
available to assist the States in locating savings bond owners. For
example, one commenter suggested that a lack of funds will ``hinder the
resources States have available to provide enhanced outreach efforts
beyond currently established efforts.'' Another noted that ``certain
challenges are created for participating States by not actually
receiving the funds that are associated with the bond records,''
leaving the States to bear the financial burden of locator services.
However, the Secure 2.0 Act does not grant funding to assist the
States in providing optional locator services. The Secure 2.0 Act only
directs Treasury to make applicable savings bond information available
to the States for the purpose of locating the owner or owner's
representatives. In prior litigation and in their comments on the NPRM,
multiple States have claimed that they ``have both the dedicated
resources and the solemn responsibility to locate the missing property
owners and reunite them with their property,'' Arkansas Brief at 6-7,
LaTurner v. United States, 933 F.3d 1354 (Fed. Cir. 2019) (No. 18-
1509), ECF No. 37, and have proclaimed that their ultimate goal is to
``help the original owners learn of, and be paid on, th[eir] bonds,''
Kansas Brief at 14, LaTurner v. United States, 933 F.3d 1354 (Fed. Cir.
2019) (No. 18-1509), ECF No. 36. States are free to use their resources
for such efforts, but nothing in the Secure 2.0 Act requires the States
to undertake these administrative efforts to locate bond owners if a
State chooses not to do so.
Lack of a Claims-Servicing Role
A number of commenters expressed a concern regarding the lack of a
``claims servicing'' role for States in the proposed regulations. These
comments appear to propose that States--not Treasury--should accept
State-specific property claim forms and require that savings bond
owners redeem their bonds through the State's unclaimed property
procedures rather than Treasury's savings bond redemption procedures.
Commenters raised concerns about the efficiency and effectiveness of
the overall Secure 2.0 Act framework, stating that a streamlined
process to locate and pay bond owners is essential. These commenters
indicated that Treasury should rely upon the States' experience in
reuniting their respective citizens with unclaimed funds, rather than
asking States to refer savings bond owners to Treasury for redemption.
Another commenter noted that a State's role in the program is unclear
if the States do not provide the proceeds of the savings bonds to their
owners.
However, the Secure 2.0 Act does not contemplate overriding the
longstanding Federal regulations, procedures, and agreements under
which individuals redeem their U.S. savings bonds for payment by the
Federal Government. Under existing Treasury regulations, there is a
well-established framework for savings bond owners to redeem their
bonds.\15\ Any savings bond owner may redeem a savings bond directly
from Fiscal Service, whether they have physical possession of the bond
or need to declare the bond lost, stolen, or destroyed. Fiscal Service
also has dedicated customer service staff trained to process complex
redemption requests, which may include decedents' estates, trusts, and
attorneys-in-fact. All necessary forms for redemption are available to
the public through the TreasuryDirect.gov website. Additionally, any
bond owner who has physical possession of a Series EE or Series I
savings bond, which is in a single owner, co-ownership, or beneficiary
ownership registration, is permitted to redeem the savings bond at any
financial institution designated by Treasury as a paying agent. These
two methods of redemption, through Fiscal Service and through
designated paying agents, promote efficient, consistent, and reliable
pathways to redemption for savings bond owners. Under this final rule,
Treasury will continue to process redemptions through established
methods.
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\15\ 31 CFR 353.39, 31 CFR 360.39.
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Restriction on Public Release of Savings Bond Information
Twelve commenters expressed concern over the NPRM's proposed
restriction of a State's public release of the applicable savings bond
information without Treasury's express consent. Commenters stated that
this restriction would place an increased administrative burden on
State agencies by preventing them from using their current
reunification methods to reunite bond owners with their bonds. The
Secure 2.0 Act requires Treasury to issue regulations or guidance as
may be necessary to ``protect the privacy of the owners of applicable
savings bonds'' and to ``prevent fraud.'' \16\ In order to balance the
competing interests, rather than adopting a blanket prohibition on
public release of relevant information, the NPRM and the final rules
permit the public release of information by States if they first obtain
Treasury's consent. In determining whether to grant such consent,
Treasury will consider the risks to savings bond owners' privacy and
the risk of fraud. In recent years, as printing technologies have
advanced, it has become easier for criminals to create fraudulent paper
savings bonds using publicly available information. Since 2021, there
have been over $40 million in redemptions of counterfeit savings bonds.
Fiscal Service has responded by taking certain steps that have reduced
the opportunities for fraud. By reducing publicly available information
and taking other precautionary steps, Treasury has significantly
reduced the number of counterfeit savings bonds presented for
redemption. Based on its experience addressing fraud, Fiscal Service
believes that making records of matured, unredeemed savings bonds
available to the public creates substantial risks of fraud.
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\16\ 31 U.S.C. 3105(f)(2).
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A few commenters stated that they believe that some savings bond
information is already publicly available; however, savings bond
records are not currently available to the public. Moreover, savings
bond information is subject to the Privacy Act of 1974, which generally
prohibits the release of such information to the public. Fiscal Service
further protects this information in its Privacy Act regulations,\17\
as well its Privacy Act System of Records Notice Treasury/Fiscal
Service .014--United States Securities and Access.\18\ Consistent with
Treasury's obligation to protect savings bond owners' personal
information, the Treasury Hunt website restricts the disclosure of
savings bond information and only suggests that a requestor contact
Fiscal Service to inquire further about their Treasury securities; it
does not provide any specific information regarding any securities that
may be held. Only after Fiscal Service verifies the requestor's
identity will it release any information to the owner as permitted
under the law and its regulations.
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\17\ 31 CFR 323.2.
\18\ 85 FR 11776, (Feb. 27, 2020). Fiscal Service intends to
modify this System of Records Notice to assist in implementing the
Secure 2.0 Act.
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Miscellaneous Comments
Treasury received comments regarding what information will be made
available to the States under the final rule. One commenter requested
[[Page 102740]]
additional information on whether Social Security numbers, savings bond
denominations, and serial numbers will be released to the States.
Another commenter suggested that the release of savings bond serial
numbers is mandatory under the Secure 2.0 Act.
Under the Secure 2.0 Act, Treasury is required to provide each
State, in digital or other electronic form, with information describing
the name and applicable address of a registered owner, co-owner, or
beneficiary of an applicable savings bond with an applicable address
within that State.\19\ Accordingly, Treasury will release the name and
applicable address of such registered owners, co-owners, and
beneficiaries to the States, pursuant to the statute.
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\19\ 31 U.S.C. 3105(f)(1)(A).
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The final rule does not include provisions for releasing Social
Security numbers, saving bond denominations, or bond serial numbers.
Based on Treasury's experience, the serial number and Social Security
number are the two items of information most likely to facilitate
fraud. Further, the Secure 2.0 Act provides that the information
Treasury shares ``may include the serial number of any applicable
savings bond,'' not that serial numbers must be shared.\20\ In
addition, in Treasury's long experience administering the savings bond
program, bond denominations have marginal or no utility in locating
bond owners. Denominations and bond serial numbers are important in the
redemption of a savings bond, but do not offer Treasury or a
participating State information regarding the location or identity of
the savings bond owner.
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\20\ See 31 U.S.C. 3105(f)(1)(B).
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One commentor submitted questions regarding the contracting and
enforcement of information sharing with the States. At this time,
Fiscal Service is working to develop a technical solution for sharing
the mandated information with the States. Any mandatory security
requirements for accessing the information will be included in the
information-sharing contracts with the States. Fiscal Service intends
to work closely with the States to ensure compliance with our security
requirements, monitoring the use of the information in accordance with
the information-sharing contract.
III. Summary of Final Rule Amendments
Overview
Fiscal Service is adding these Secure 2.0 Act regulations to 31 CFR
part 323, which includes regulations adopted under the Freedom of
Information Act (FOIA) regarding the disclosure of records.\21\ Fiscal
Service is maintaining the current FOIA regulations found in part 323
by moving the existing provisions in Sec. Sec. 323.1 through 323.5
into a new subpart A. A new subpart B contains the regulations to
implement the Secure 2.0 Act requirements to provide information and
records containing applicable savings bond information to States.
Subpart B includes definitions necessary to implement the regulations,
requirements for a State to receive applicable savings bond
information, conditions regarding the use of the information, and
liability terms. Separating the regulations implementing the two
different statutory authorities, FOIA and the Secure 2.0 Act, by
subpart is intended to assist the public in identifying the two
separate authorities under which an individual or a State may request
information.
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\21\ 31 CFR part 323.
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Treasury believes the new disclosure of applicable savings bond
information requirements is closely associated with the purpose of FOIA
and its existing disclosure regulations. While the Secure 2.0 Act only
allows for disclosure of certain information to States, rather than to
the public at large, a savings bond owner could look to a single
regulation, part 323, to determine the various ways in which their
savings bond information could be disclosed.
Subpart A, Sec. 323.1
As noted above, subpart A as amended contains regulations that
implement FOIA for Fiscal Service, previously found at part 323.
Accordingly, the final rule makes a technical modification to the first
sentence of Sec. 323.1 to identify ``this subpart'' rather than ``this
part.''
Subpart B
Following are summaries of the provisions in the new subpart B, all
of which are being added in this final rule.
Purpose of the Regulations, Sec. 323.10
This section briefly describes the purpose of the new regulatory
provisions, namely to implement the Secure 2.0 Act.
Rules Governing Sharing of Applicable Savings Bond Information With
States, Sec. 323.11
Section 323.11 includes the definitions and terms necessary to
provide States the information required by the Secure 2.0 Act. In
addition, the amendments add new provisions to help protect the privacy
of the owners of applicable savings bonds, prevent fraud, and ensure
that shared information is used only for permissible purposes under the
Secure 2.0 Act.
Definitions, Sec. 323.11(a)
The Secure 2.0 Act requires Treasury to provide, in digital or
other electronic form, each State with information describing any
``applicable savings bond'' that has an ``applicable address'' within
such State. The statute requires this information to include the name
and applicable address for each registered owner, co-owner, or
beneficiary. ``Applicable address'' is defined in the statute as the
registered address for the registered owner, co-owner, or beneficiary
of the savings bond or the last-known address for the foregoing if it
is available to Treasury.\22\ The final rule defines ``last-known
address'' to mean an address available to Fiscal Service after a
reasonable search of its records.
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\22\ 31 U.S.C. 3105(f)(1)(C).
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While the level of effort dedicated to the search could be
expressed in various degrees, a ``reasonable'' search balances the
goals of efficiency and effectiveness. An exhaustive search, for
example, would be unduly costly and burdensome on Fiscal Service, given
the breadth of our systems of records, and unlikely to significantly
change the results of the search. ``Record'' is broadly defined to
include any data or documentation containing or composed of information
describing relevant applicable savings bonds, including the applicable
addresses of the owners. This definition allows Fiscal Service to
protect savings bond owners from unauthorized disclosure of their
information, as any information received from Treasury will remain a
record subsequent to disclosure.
The term ``State'' is also broadly defined in the final rule to
mean U.S. territories, possessions, and the District of Columbia, as
well as the 50 States. This definition is consistent with available
registered addresses over the lifetime of the savings bond program.
Requests for Records
Section 323.11(b) provides that each State may request applicable
savings bond records from Fiscal Service. Upon request, the State must
enter into an information-sharing agreement with Fiscal Service to
receive the requested records. Fiscal Service expects that this
agreement will require a State to make representations regarding
protecting the savings bond records from unauthorized
[[Page 102741]]
disclosure, including security requirements for receiving and storing
the records. These security requirements are appropriate to minimize
the risk of fraud or misuse or misappropriation of information.
Use of Records
Section 323.11(c) specifies how the records or information
contained therein may be used by States, in compliance with the Secure
2.0 Act. As stated at 31 U.S.C. 3105(f), Treasury's regulations are
required to ensure that applicable savings bond information provided to
a State will be used solely to carry out the purpose of locating the
owner of the savings bond.\23\ In accordance with this statutory
requirement, the regulation provides that the applicable savings bond
information cannot be used to escheat savings bond ownership to a
State. The purpose of the Secure 2.0 Act is for Treasury to provide
information regarding applicable savings bonds to States to assist in
locating the owner of the bonds. The Secure 2.0 Act does not allow
States to use the provided records and information to escheat the
bonds, which would conflict with the rights of savings bond owners to
redeem matured savings bonds whenever they choose.
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\23\ 31 U.S.C. 3105(f)(2).
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Under the regulation, in order to protect the savings bond owner's
privacy, any applicable savings bond information provided to States
cannot be released to the public or any third party without Treasury's
express written approval. This requirement is also expected to be
incorporated into the information-sharing agreement described above.
The requirement to obtain such approval from Treasury is also intended
to ensure that the release of savings bond records or the information
therein does not subject Fiscal Service customers to fraud risk. In
recent years, Fiscal Service has taken steps that have reduced the
opportunities for fraud, and making records of matured, unredeemed
savings bonds available to the public would create an unacceptable risk
of fraud. Fiscal Service will continue to monitor savings bond fraud
and consider implementing further risk-mitigation strategies, which may
eventually allow for certain savings bond records to be distributed
publicly.
Liability
Under Sec. 323.11(d), Treasury will not be responsible for any
loss, liability, cost, or expense that results from a State's receipt,
use, or distribution of records regarding applicable savings bonds or
any information contained therein. Any misuse of savings bond records
or information provided to a State under the regulations could result
in fraudulent activity, breach of privacy for a savings bond owner, and
financial loss for bond owners. Under the regulations, a State that
receives information under the regulations bears the responsibility
for, and indemnifies Treasury against, any loss or other costs
associated with the State's receipt, use, distribution of, or failure
to adequately protect, any records or information.
Severability, Sec. 323.12
This provision clarifies Treasury's intent with respect to the
severability of provisions of this rule. In the event any section,
subsection, clause, paragraph, or phrase of this subpart is deemed
invalid or unconstitutional by a court of competent jurisdiction, all
remaining provisions shall continue in effect.
IV. Procedural Requirements
A. Executive Order 12866
This rule is not a significant regulatory action as defined in E.O.
12866, dated September 30, 1993, as amended, and is not a major rule
under 5 U.S.C. 804.
B. Administrative Procedure Act (APA)
Because this rule relates to United States securities, which are
contracts between Treasury and the owner of the security, this rule
falls within the contract exception to the APA, 5 U.S.C. 553(a)(2).
Treasury voluntarily sought public comment to assist the agency in
assessing the impact of the rule.
C. Regulatory Flexibility Act
This rule relates to matters of public contract and procedures for
United States securities. Since a notice of proposed rulemaking is not
required, the provisions of the Regulatory Flexibility Act, 5 U.S.C.
601 et seq., do not apply. In any event, Treasury certifies that this
rule, which implements the Secure 2.0 Act's requirements that Treasury
provide certain U.S. savings bond information to States, will not have
a significant economic impact on a substantial number of small
entities.\24\
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\24\ 5 U.S.C. 605(b).
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D. Paperwork Reduction Act
The provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et
seq., and its implementing regulations, 5 CFR part 1320, do not apply
to this rule because there are no new or revised recordkeeping or
reporting requirements.
List of Subjects in 31 CFR Part 323
Archives and records, Freedom of information, Privacy, Savings
bonds.
Accordingly, for the reasons set forth in the preamble, Treasury
amends 31 CFR part 323, as follows:
PART 323--DISCLOSURE OF RECORDS
0
1. 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.
0
2. Add subpart A to read as follows:
Subpart A--Freedom of Information Act
Sec. Sec. 323.1 through 323.5 [Designated as Subpart A]
0
3. Designate Sec. Sec. 323.1 through 323.5 as subpart A.
0
4. Revise the first sentence of Sec. 323.1 to read as follows:
Sec. 323.1 Purpose of regulations.
The regulations of this subpart are issued to implement 5 U.S.C.
552(a)-(2) and (3). * * *
0
5. Add subpart B to read as follows:
Subpart B--SECURE 2.0 Act of 2022
Sec.
323.10 Purpose of this subpart.
323.11 Rules governing sharing of applicable savings bond
information with States.
323.12 Severability.
Authority: 31 U.S.C. 3105(f).
Subpart B--SECURE 2.0 Act of 2022
Sec. 323.10 Purpose of this subpart.
The regulations of this subpart are issued to implement section 122
of the SECURE 2.0 Act of 2022, 31 U.S.C. 3105(f). The requirements of
31 U.S.C. 3105(f) are additionally met through the publication of a new
Routine Use in the applicable Fiscal Service System of Record Notice.
Sec. 323.11 Rules governing sharing of applicable savings bond
information with States.
(a) Definitions. For purposes of this section:
Applicable address has the meaning set forth in 31 U.S.C.
3105(f)(1)(C).
Applicable savings bond has the meaning set forth in 31 U.S.C.
3105(f)(6).
Last known address means the full street address, if available,
found after a reasonable search of Fiscal Service records.
Name means the full registered name of the owner, co-owner, or
beneficiary of
[[Page 102742]]
an applicable savings bond, as it appears on the savings bond
inscription.
Record means data or documentation, whether in paper, digital, or
other electronic form, containing or composed of information describing
any applicable savings bond which has an applicable address within a
State, including the name and registered address or last known address
of the registered owner, co-owner, or beneficiary, as further defined
in 31 U.S.C. 3105(f)(1).
Registered address means the address included in the savings bond
inscription.
State means the fifty States, the District of Columbia, American
Samoa, the Federated States of Micronesia, Guam, the United States
Virgin Islands, the Marshall Islands, the Commonwealth of the Northern
Mariana Islands, Palau, and the Commonwealth of Puerto Rico.
(b) Requests for records. Records will be made available to States
in compliance with 31 U.S.C. 3105(f) and this subpart, upon request by
a State to Fiscal Service. Prior to receiving access to records, each
State, through an authorized State representative, must enter into an
information-sharing agreement with Fiscal Service using a form that
will be provided by Fiscal Service. Such agreements may contain, among
other things, requirements that Treasury deems necessary or appropriate
to ensure the security of the information.
(c) Use of records. Any records or any information made available
to a State under this subpart:
(1) Must be used only for the purpose of locating the owner of an
applicable savings bond;
(2) Must not be used to escheat savings bond ownership to a State;
and
(3) Must not be released by a State to the public or any third
party, unless explicitly approved in writing, in advance, by Treasury.
(d) Liability. Treasury is not liable for any loss, liability,
cost, or expense that may result from a State's receipt, use, or
distribution of records or any information contained therein. A State
receiving records under this subpart shall indemnify Treasury for any
loss, liability, cost, or expense associated with the State's receipt,
use, or distribution of, or failure to adequately protect, records or
any information contained therein.
Sec. 323.12 Severability.
The provisions of this subpart are severable, and if any section,
subsection, clause, paragraph, or phrase of this subpart shall be
adjudged to be invalid or unconstitutional by any court of competent
jurisdiction, the judgment shall not affect, impair, or invalidate the
remainder of this subpart, but shall be confined in its operation to
the section, subsection, clause, paragraph, or phrase directly involved
in the controversy in which such judgment shall have been rendered, and
the remainder of this subpart shall continue to be in force and effect.
By the Department of the Treasury.
David Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2024-29988 Filed 12-17-24; 8:45 am]
BILLING CODE P
