2023-14204. Distinctive Paper and Distinctive Counterfeit Deterrents for United States Federal Reserve Notes

AGENCY:

Bureau of Engraving and Printing, Treasury.

ACTION:

Final regulations.

SUMMARY:

This final rule updates the description of the distinctive paper and distinctive counterfeit deterrents used to guard against counterfeit and fraudulently altered United States (U.S.) Federal Reserve notes. This final rule adopts a January 18, 2023, proposed rule without change.

DATES:

Effective August 7, 2023.

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

Background and Proposed Rule

The Department of the Treasury, Bureau of Engraving and Printing's (BEP) mission is to develop and manufacture U.S. Federal Reserve notes that are trusted worldwide. Accordingly, the Secretary of the Treasury has delegated specific authority and responsibilities related to producing U.S. Federal Reserve notes to the Director of BEP only. (Treasury Order 101–07, Delegation to the Director, Bureau of Engraving and Printing, for the Production of Currency Notes to Meet the Demands of the Federal Reserve Banks, January 4, 2021.)

On January 18, 2023, BEP published a notice of proposed rulemaking (REG–00854–23) in the Federal Register (88 FR 2871). The BEP is adopting as final that proposed rule, which clarifies the description of the distinctive paper and distinctive counterfeit deterrents separately for U.S. Federal Reserve notes, removes obsolete language, aligns the regulation to the current state-of-art and emerging technologies generated as a result of BEP's research and development initiatives, clarifies the agency's authority for adopting distinctive paper and distinctive counterfeits deterrents, and announces the adoption of new distinctive paper and counterfeit deterrents by the Secretary of the Treasury.

This Final Rule

The public comment period on the proposed rule closed on March 20, 2023. No comments were received from the public in response to the notice of proposed rulemaking. Accordingly, BEP adopts the proposed regulation as the final regulation without modification for the reasons discussed in the proposed rule and this preamble.

Procedural Analyses

A. Regulatory Flexibility Act

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

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

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

C. Unfunded Mandates Reform Act of 1995

Section 202 of the Unfunded Mandates Reform Act of 1995 requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a rule that includes any federal mandate that may result in expenditures in any one year by a state, local, or tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. This regulation does not include any federal mandate that may result in expenditures by state, local, or tribal governments or the private sector exceeding that threshold.

D. Federalism

Executive Order 13132 (titled Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on state and local governments and is not required by statute or preempts state law unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This rule does not have federalism implications nor impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive Order.

E. Paperwork Reduction Act (PRA) Notices

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

F. Severability

BEP has considered how this regulation should be construed if any provision were held to be invalid or unenforceable. The distinctive paper and each of the distinctive counterfeit deterrents contribute independently to the security of U.S. Federal Reserve notes. Accordingly, were protection for any of these items stayed or invalidated by a reviewing court, prohibition of the unauthorized possession or control of the remaining items would continue to serve the intended purpose of guarding against counterfeit and fraudulently altered U.S. Federal Reserve notes.

List of Subjects in 31 CFR Part 601

• Currency
• Securities
• Printing

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

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

601.1

Notice and scope.

601.2

Distinctiveness requirement.

601.3

Distinctive paper.

601.4

Distinctive counterfeit deterrents.

601.5

Penalty for unauthorized control or possession.

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

§ 601.1

Notice and scope.

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

§ 601.2

Distinctiveness requirement.

(a) The Secretary of the Treasury has adopted distinctive paper and distinctive counterfeit deterrents:

(1) In which the United States has an exclusive property interest; or

(2) That are not otherwise in commercial use or the public domain and are necessary for preventing the counterfeiting of United States Federal Reserve notes.

(b) The distinctive paper and counterfeit deterrents are used in United States Federal Reserve notes.

§ 601.3

Distinctive paper.

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

§ 601.4

Distinctive counterfeit deterrents.

The distinctive counterfeit deterrents that may be used in the denominations of United States Federal Reserve notes as prescribed by the Secretary of the Treasury are:

(a) Security threads containing graphics consisting of the designation “USA” and the denomination of the currency note, expressed in alphabetic or numeric characters.

(b) Optically variable inks with material characteristics.

(c) Non-visual characteristic inks with material characteristics.

(d) Optically variable thread (three-dimensional (3–D) security ribbon and micro-optic stripe) visible in front or back of the currency note.

(e) Non-visual characteristic features with material characteristics.

§ 601.5

Penalty for Unauthorized Control or Possession.

(a) Control or possession of distinctive paper and/or distinctive counterfeit deterrents adopted in §§  601.3 and 601.4 require authorization by the Secretary of the Treasury.

(b) The penalty for unauthorized control and/or possession of distinctive paper and/or distinctive counterfeit deterrents adopted in §§  601.3 and 601.4 is found at 18 U.S.C. 474A.

Leonard R. Olijar,

Director.