Federal Register / Vol. 69, No. 3 / Tuesday, January 6, 2004 / Rules and Regulations 507

PART 301—PROCEDURE AND 

ADMINISTRATION

Paragraph 1. The authority citation for 

part 301 is amended by adding entries 

in numerical order to read as follows:

Authority: 26 U.S.C. 7805 * * *

Section 301.6103(l)–1 also issued under 26 

U.S.C. 6103(q). 

Section 301.6103(m)–1 also issued under 

26 U.S.C. 6103(q). * * *

■ Par. 2. Section 301.6103(l)–1 is added 

to read as follows:

§ 301.6103(l)–1 Disclosure of returns and 

return information for purposes other than 

tax administration. 

(a) Definition. For purposes of 

applying the provisions of section 

6103(l) of the Internal Revenue Code, 

the term agent includes a contractor. 

(b) Effective date. This section is 

applicable January 6, 2004.

■ Par. 3. Section 301.6103(m)–1 is added 

to read as follows:

§ 301.6103(m)–1 Disclosure of taxpayer 

identity information. 

(a) Definition. For purposes of 

applying the provisions of section 

6103(m) of the Internal Revenue Code, 

the term agent includes a contractor. 

(b) Effective date. This section is 

applicable January 6, 2004.

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: December 16, 2003. 

Pamela F. Olson, 

Assistant Secretary of the Treasury (Tax 

Policy).

[FR Doc. 03–32220 Filed 12–31–03; 11:59 

am] 

BILLING CODE 4830–01–P

DEPARTMENT OF DEFENSE

Department of the Air Force 

32 CFR Part 806b 

[Air Force Instruction 37–132] 

Privacy Act; Implementation

AGENCY: Department of the Air Force, 

DoD.

ACTION: Final rule.

SUMMARY: The Department of the Air 

Force is revising a (j)(2) exemption to an 

existing exemption rule for the Privacy 

Act system of records notice F090 AF IG 

B, Inspector General Records. The (j)(2) 

exemption will increase the value of the 

system of records for law enforcement 

purposes.

EFFECTIVE DATE: March 12, 2002.

FOR FURTHER INFORMATION CONTACT: Mrs. 

Anne Rollins at (703) 601–4043.

SUPPLEMENTARY INFORMATION: The 

proposed rule was previously published 

on January 11, 2002, at 67 FR 1423. No 

comments were received; therefore, the 

rule is being adopted as final. 

Executive Order 12866, ‘‘Regulatory 

Planning and Review’’

It has been determined that Privacy 

Act rules for the Department of Defense 

are not significant rules. The rules do 

not (1) Have an annual effect on the 

economy of $100 million or more or 

adversely affect in a material way the 

economy; a sector of the economy; 

productivity; competition; jobs; the 

environment; public health or safety; or 

State, local, or tribal governments or 

communities; (2) create a serious 

inconsistency or otherwise interfere 

with an action taken or planned by 

another Agency; (3) materially alter the 

budgetary impact of entitlements, 

grants, user fees, or loan programs, or 

the rights and obligations of recipients 

thereof; or (4) raise novel legal or policy 

issues arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in this Executive order. 

Public Law 96–354, ‘‘Regulatory 

Flexibility Act’’ (5 U.S.C. Chapter 6) 

It has been determined that Privacy 

Act rules for the Department of Defense 

do not have significant economic impact 

on a substantial number of small entities 

because they are concerned only with 

the administration of Privacy Act 

systems of records within the 

Department of Defense. 

Public Law 96–511, ‘‘Paperwork 

Reduction Act’’ (44 U.S.C. Chapter 35) 

It has been determined that Privacy 

Act rules for the Department of Defense 

impose no information requirements 

beyond the Department of Defense and 

that the information collected within 

the Department of Defense is necessary 

and consistent with 5 U.S.C. 552a, 

known as the Privacy Act of 1974. 

Section 202, Public Law 104–4, 

‘‘Unfunded Mandates Reform Act’’

It has been determined that Privacy 

Act rulemaking for the Department of 

Defense does not involve a Federal 

mandate that may result in the 

expenditure by State, local and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

and that such rulemaking will not 

significantly or uniquely affect small 

governments. 

Executive Order 13132, ‘‘Federalism’’

It has been determined that Privacy 

Act rules for the Department of Defense 

do not have federalism implications. 

The rules do not have substantial direct 

effects on the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government.

List of Subjects in 32 CFR Part 806b 

Privacy.

■ Accordingly, 32 CFR part 806b is 

amended as follows:

PART 806b—AIR FORCE PRIVACY 

ACT PROGRAM

■ 1. The authority citation for 32 CFR 

part 806b continues to read as follows:

Authority: Pub. L. 93–579, 88 Stat. 1896 (5 

U.S.C. 552a).

■ 2. Appendix C to section 806b is 

amended by adding paragraph a.(6) to 

read as follows:

Appendix C to Part 806b—General and 

Specific Exemptions

* * * * *

a. * * *

(6) System identifier and name: F090 AF IG 

B, Inspector General Records. 

(i) Exemption: (A) Parts of this system of 

records may be exempt pursuant to 5 U.S.C. 

552a(j)(2) if the information is compiled and 

maintained by a component of the agency 

which performs as its principle function any 

activity pertaining to the enforcement of 

criminal laws. 

(B) Any portion of this system of records 

which falls within the provisions of 5 U.S.C. 

552a(j)(2) may be exempt from the following 

subsections of 5 U.S.C. 552a(c)(3), (c)(4), (d), 

(e)(1), (e)(2), (e)(3), (e)(4)(G), (H), and (I), 

(e)(5), (e)(8), (f), and (g). 

(ii) Authority: 5 U.S.C. 552a(j)(2). 

(iii) Reasons: (A) From subsection (c)(3) 

because the release of accounting of 

disclosure would inform a subject that he or 

she is under investigation. This information 

would provide considerable advantage to the 

subject in providing him or her with 

knowledge concerning the nature of the 

investigation and the coordinated 

investigative efforts and techniques 

employed by the cooperating agencies. This 

would greatly impede the Air Force IG’s 

criminal law enforcement. 

(B) From subsection (c)(4) and (d), because 

notification would alert a subject to the fact 

that an open investigation on that individual 

is taking place, and might weaken the ongoing investigation, reveal investigative 

techniques, and place confidential 

informants in jeopardy. 

(C) From subsection (e)(1) because the 

nature of the criminal and/or civil 

investigative function creates unique 

problems in prescribing a specific parameter 

in a particular case with respect to what 

information is relevant or necessary. Also, 

508 Federal Register / Vol. 69, No. 3 / Tuesday, January 6, 2004 / Rules and Regulations 

information may be received which may 

relate to a case under the investigative 

jurisdiction of another agency. The 

maintenance of this information may be 

necessary to provide leads for appropriate 

law enforcement purposes and to establish 

patterns of activity which may relate to the 

jurisdiction of other cooperating agencies. 

(D) From subsection (e)(2) because 

collecting information to the fullest extent 

possible directly from the subject individual 

may or may not be practical in a criminal 

and/or civil investigation. 

(E) From subsection (e)(3) because 

supplying an individual with a form 

containing a Privacy Act Statement would 

tend to inhibit cooperation by many 

individuals involved in a criminal and/or 

civil investigation. The effect would be 

somewhat adverse to established 

investigative methods and techniques. 

(F) From subsections (e)(4)(G), (H), and (I) 

because this system of records is exempt 

from the access provisions of subsection (d). 

(G) From subsection (e)(5) because the 

requirement that records be maintained with 

attention to accuracy, relevance, timeliness, 

and completeness would unfairly hamper the 

investigative process. It is the nature of law 

enforcement for investigations to uncover the 

commission of illegal acts at diverse stages. 

It is frequently impossible to determine 

initially what information is accurate, 

relevant, timely, and least of all complete. 

With the passage of time, seemingly 

irrelevant or untimely information may 

acquire new significance as further 

investigation brings new details to light. 

(H) From subsection (e)(8) because the 

notice requirements of this provision could 

present a serious impediment to law 

enforcement by revealing investigative 

techniques, procedures, and existence of 

confidential investigations. 

(I) From subsection (f) because the agency’s 

rules are inapplicable to those portions of the 

system that are exempt and would place the 

burden on the agency of either confirming or 

denying the existence of a record pertaining 

to a requesting individual might in itself 

provide an answer to that individual relating 

to an on-going investigation. The conduct of 

a successful investigation leading to the 

indictment of a criminal offender precludes 

the applicability of established agency rules 

relating to verification of record, disclosure 

of the record to that individual, and record 

amendment procedures for this record 

system.

(J) From subsection (g) because this system 

of records should be exempt to the extent 

that the civil remedies relate to provisions of 

5 U.S.C. 552a from which this rule exempts 

the system. 

(iv) Authority: (A) Investigative material 

compiled for law enforcement purposes, 

other than material within the scope of 

subsection 5 U.S.C. 552a(j)(2), may be exempt 

pursuant to 5 U.S.C. 552a(k)(2). However, if 

an individual is denied any right, privilege, 

or benefit for which he would otherwise be 

entitled by Federal law or for which he 

would otherwise be eligible, as a result of the 

maintenance of the information, the 

individual will be provided access to the 

information exempt to the extent that 

disclosure would reveal the identity of a 

confidential source. NOTE: When claimed, 

this exemption allows limited protection of 

investigative reports maintained in a system 

of records used in personnel or 

administrative actions. 

(B) Therefore, portions of this system of 

records may be exempt pursuant to 5 U.S.C. 

552a(k)(2) from the following subsections of 

5 U.S.C. 552a(c)(3), (d), (e)(1), (e)(4)(G), (H) 

and (I), and (f). 

(v) Reasons: (A) From subsection (c)(3) 

because to grant access to the accounting for 

each disclosure as required by the Privacy 

Act, including the date, nature, and purpose 

of each disclosure and the identity of the 

recipient, could alert the subject to the 

existence of the investigation. This could 

seriously compromise case preparation by 

prematurely revealing its existence and 

nature; compromise or interfere with 

witnesses or make witnesses reluctant to 

cooperate; and lead to suppression, 

alteration, or destruction of evidence. 

(B) From subsections (d) and (f) because 

providing access to investigative records and 

the right to contest the contents of those 

records and force changes to be made to the 

information contained therein would 

seriously interfere with and thwart the 

orderly and unbiased conduct of the 

investigation and impede case preparation. 

Providing access rights normally afforded 

under the Privacy Act would provide the 

subject with valuable information that would 

allow interference with or compromise of 

witnesses or render witnesses reluctant to 

cooperate; lead to suppression, alteration, or 

destruction of evidence; enable individuals 

to conceal their wrongdoing or mislead the 

course of the investigation; and result in the 

secreting of or other disposition of assets that 

would make them difficult or impossible to 

reach in order to satisfy any Government 

claim growing out of the investigation or 

proceeding. 

(C) From subsection (e)(1) because it is not 

always possible to detect the relevance or 

necessity of each piece of information in the 

early stages of an investigation. In some 

cases, it is only after the information is 

evaluated in light of other evidence that its 

relevance and necessity will be clear. 

(D) From subsections (e)(4)(G) and (H) 

because this system of records is compiled 

for investigative purposes and is exempt from 

the access provisions of subsections (d) and 

(f). 

(E) From subsection (e)(4)(I) because to the 

extent that this provision is construed to 

require more detailed disclosure than the 

broad, generic information currently 

published in the system notice, an exemption 

from this provision is necessary to protect the 

confidentiality of sources of information and 

to protect privacy and physical safety of 

witnesses and informants. 

(F) Consistent with the legislative purpose 

of the Privacy Act of 1974, the AF will grant 

access to nonexempt material in the records 

being maintained. Disclosure will be 

governed by AF’s Privacy Regulation, but 

will be limited to the extent that the identity 

of confidential sources will not be 

compromised; subjects of an investigation of 

an actual or potential criminal or civil 

violation will not be alerted to the 

investigation; the physical safety of 

witnesses, informants and law enforcement 

personnel will not be endangered, the 

privacy of third parties will not be violated; 

and that the disclosure would not otherwise 

impede effective law enforcement. Whenever 

possible, information of the above nature will 

be deleted from the requested documents and 

the balance made available. The controlling 

principle behind this limited access is to 

allow disclosures except those indicated 

above. The decisions to release information 

from these systems will be made on a caseby-case basis.

* * * * *

Dated: December 24, 2003. 

L.M. Bynum, 

Alternate OSD Federal Register Liaison 

Officer, Department of Defense.

[FR Doc. 04–24 Filed 1–5–04; 8:45 am] 

BILLING CODE 5001–08–P

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 447

[CMS–2175–IFC] 

RIN 0938–AM20

Medicaid Program; Time Limitation on 

Recordkeeping Requirements Under 

the Drug Rebate Program

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Interim final rule with comment 

period. 

SUMMARY: On August 29, 2003, we 

published a final rule with comment 

period in the Federal Register that 

finalized two specific provisions: it 

established new 3-year recordkeeping 

requirements for drug manufacturers 

under the Medicaid drug rebate program 

and set a 3-year time limitation during 

which manufacturers must report 

changes to average manufacturer price 

and best price for purposes of reporting 

data to us. In addition, it announced the 

pressing need for codification of 

fundamental recordkeeping 

requirements. On September 26, 2003, 

we issued a correction notice to change 

the effective date of the August 29, 2003 

rule from October 1, 2003 to January 1, 

2004. 

In this interim final rule with 

comment period, we are removing the 3-

year recordkeeping requirements, 

replacing them with 10-year 

recordkeeping requirements on a 

temporary basis, and soliciting 

comments on the 10-year requirements.