This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

51817

Vol. 62, No. 192

Friday, October 3, 1997

1 62 FR 15626 (April 2, 1997) (Notice of Proposed

Rulemaking on Deposits and Advance Notice of

Proposed Rulemaking on Electronic Banking.) A

final rule on deposits will be published separately.

NUCLEAR REGULATORY

COMMISSION

10 CFR Part 32

RIN 3150–AF76

License Applications for Certain Items

Containing Byproduct Material;

Correction

AGENCY: Nuclear Regulatory

Commission.

ACTION: Proposed rule; Correction.

SUMMARY: This document corrects a

proposed rule appearing in the Federal

Register on September 19, 1997 (62 FR

49173). The action is necessary to

correct a publication date and cite.

FOR FURTHER INFORMATION CONTACT:

Mary Thomas, Office of Nuclear

Regulatory Research, on 301–415–6230.

SUPPLEMENTARY INFORMATION: On page

49173, in the second column, last

paragraph, October 29, 1993 (58 FR

52670)’’ should read ‘‘October 18, 1993

(58 FR 53670).’’

Dated at Rockville, Maryland, this 29th day

of September, 1997.

For the Nuclear Regulatory Commission.

David L. Meyer,

Chief, Rules and Directives Branch, Division

of Administrative Services, Office of

Administration.

[FR Doc. 97–26270 Filed 10–2–97; 8:45 am]

BILLING CODE 7590–01–P

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 545

[97–100]

RIN 1550–AB00

Electronic Operations

AGENCY: Office of Thrift Supervision,

Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Office of Thrift

Supervision (OTS) is proposing to

streamline and update regulations

relating to electronic operations. The

proposal would amend OTS electronicrelated regulations to address advances

in technology, and to permit prudent

innovation for the use of emerging

technology by Federal savings

associations. This NPR is issued

pursuant to the Regulatory Reinvention

Initiative of the Vice President’s

National Performance Review and

section 303 of the Community

Development and Regulatory

Improvement Act of 1994.

DATES: Comments must be received on

or before December 2, 1997.

ADDRESSES: Send comments to Manager,

Dissemination Branch, Records

Management and Information Policy,

Office of Thrift Supervision, 1700 G

Street, NW., Washington, DC 20552,

Attention Docket No. 97–100. These

submissions may be hand-delivered to

1700 G Street, NW., from 9:00 a.m. to

5:00 p.m. on business days; they may be

sent by facsimile transmission to FAX

Number (202) 906–7755 or by e-mail

public.info@ots.treas.gov. Those

commenting by e-mail should include

their name and telephone number.

Comments will be available for

inspection at 1700 G Street, NW., from

9:00 a.m. until 4:00 p.m. on business

days.

FOR FURTHER INFORMATION CONTACT:

Valerie J. Lithotomos, Counsel (Banking

and Finance), (202) 906–6439; Karen A.

Osterloh, Assistant Chief Counsel, (202)

906–6639; Paul D. Glenn, Special

Counsel, Chief Counsel’s Office, (202)

906–6203; Paul J. Robin, Program

Analyst, Compliance Policy, (202) 906–

6648; or Paul R. Reymann, Policy

Analyst, Supervision Policy, (202) 906–

5645, Office of Thrift Supervision, 1700

G Street NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

I. Background

On April 2, 1997, OTS published an

advance notice of proposed rulemaking

(ANPR) seeking comment on all aspects

of banking affected by electronic

operations.1 OTS solicited comments on

whether its existing regulations are

sufficiently flexible to permit Federal

savings associations to engage in

appropriate electronic banking

activities, consistent with safety and

soundness and applicable statutes and

regulations. OTS expressed concern that

its current regulations do not adequately

address product innovation made

possible by advances in technology, and

may impede prudent innovation by

Federal savings associations.

OTS identified three existing

regulations affecting a Federal thrift’s

ability to engage in electronic activities.

Two of these regulations describe the

type of facilities through which Federal

thrifts may deliver banking services. 12

CFR 545.141 (Remote Service Units)

(RSUs) and 12 CFR 545.142 (Home

Banking Services). The third regulation,

at 12 CFR 545.138, provides the general

authority to engage in data processing

activities and sell certain excess data

processing capacity. OTS sought

comment on how to update these

regulations, first adopted in the early

1980s, to reflect current activities and

use of technologies. OTS also sought

comment on certain technological issues

that its existing regulations do not

address. These included issues related

to stored-value cards, the application of

the Community Reinvestment Act (CRA)

to electronic banking, banking on the

Internet, and other new products and

delivery systems.

OTS received 19 comments from nine

Federal savings associations, four trade

associations, two technology firms, two

individuals or groups of individuals,

one Federal government agency, and a

representative of two major credit card

companies. The comments are

discussed in further detail in the

description of the proposed rule.

Commenters suggested two broad

principles to guide OTS in drafting

regulations on emerging electronic

services:

• The public and insured depository

institutions will be best served if

statutory and regulatory restrictions

are kept to a minimum. Commenters

feared that the premature imposition

of restrictive operational standards

would impede the development of

improved financial services.

• Savings associations should be

permitted to compete effectively with

other regulated financial institutions

and unregulated firms offering

financial and related services.
51818 Federal Register / Vol. 62, No. 192 / Friday, October 3, 1997 / Proposed Rules

2See ‘‘A Framework for Global Electronic

Commerce’’ (July 1, 1997). These principles are: (1)

The private sector should lead; (2) Governments

should avoid undue restrictions on electronic

commerce; (3) Where governmental involvement is

needed, its aim should be to support and enforce

a predictable, minimalist, consistent and simple

legal environment for commerce; (4) Governments

should recognize the unique qualities of the

Internet; and (5) Electronic commerce over the

Internet should be facilitated on a global basis.

3OTS will shortly provide guidance concerning

consultation procedures to be followed when a

Federal savings association permits customers to

execute transactions by accessing the thrift’s data

base using the customer’s equipment or other

equipment that is not provided by the thrift.

4 In the ANPR, OTS specifically asked for

comment on whether automated loan machines

(ALMs) should be considered an RSU, a branch

office, or some other type of facility. ALMs may

permit customers to apply for and immediately

receive loans via an automated terminal.

Commenters urged OTS to treat ALMs like RSUs,

rather than branches. These commenters argued

that this treatment would provide savings

associations with the same flexible product delivery

options as competing financial institutions. See

OCC Interpretive Letter #772 (March 6, 1997)

(RSUs, ATMs, and ALMs are not branches for the

purposes of 12 U.S.C. 36). Under the proposed

revisions to the OTS regulation, ALMs would be

electronic facilities subject to Subpart B, and would

not be branches.

II. General Description of Proposed

Rule

Consistent with the principles

identified, OTS is proposing to issue a

broad enabling regulation clarifying that

Federal savings associations may engage

in any activity through electronic means

that it may conduct through more

traditional delivery mechanisms. This

approach will enhance the ability of

Federal savings associations to serve as

financial intermediaries. In addition,

this approach will permit Federal

savings associations to fully utilize the

by-products or capacities generated in

providing financial services through

electronic means. The approach will

also permit Federal thrifts to creatively

provide access to financial services

(subject, of course, to adequate security

measures). This proposal is consistent

with the principles established in the

Administration’s recent electronic

commerce policy statement.2

The proposed rule would eliminate

existing regulations that address

electronic operations at § 545.138 (Dataprocessing Services), § 545.141 (Remote

Services Units), and § 545.132 (Home

Banking Services), and would add a

new subpart B to part 545 to address

electronic operations. New subpart B

uses plain language drafting techniques

consistent with National Performance

Review instructions and new guidance

in the Federal Register Document

Drafting Handbook (January 1997

edition). The primary goal of plain

language drafting is to facilitate the

understanding of regulations. Plain

language drafting emphasizes the use of

informative headings (often written as a

question), non-technical language

(including the use of ‘‘you’’) and

sentences in the active voice. The words

‘‘I’’ in a question and ‘‘you’’ in an

answer, in the proposal, refer to a

Federal savings association. OTS

intends to use plain language drafting in

other future regulatory projects to the

extent possible.

The provisions of the new subpart are

discussed below in the section-bysection analysis.

III. Section-by-Section Analysis

What Does This Subpart Do? (Proposed

§ 545.140)

Under the proposed rule, all current

regulations addressing electronic

operations will be consolidated in part

545, subpart B. This subpart describes

how a Federal savings association may

provide products and services through

electronic means and facilities. See

proposed § 545.140.

How May I Use Electronic Means and

Facilities? (Proposed § 545.141)

As noted above, two existing OTS

regulations describe the type of facilities

through which Federal thrifts may

deliver banking services electronically.

Section 545.141 addresses RSUs

(including automated teller machines

(ATMs)). Section 545.142 addresses

home banking services. Currently,

Federal thrifts’ authority to provide

banking services through these

authorities is restricted. For example, an

RSU may not be used to open a savings

account or a demand account, or to

establish a loan account. See 12 CFR

545.141(b). Moreover, it is unclear

whether § 545.142 would permit the

opening of new accounts or the

processing of credit applications as

home banking services.

Commenters urged OTS to clarify and

expand the activities permitted under

these authorities to include a broad

range of products and services,

including opening deposit accounts and

establishing loan accounts. Commenters

argued that removing activity

restrictions would serve the public

interest by allowing thrifts to more

effectively compete in financial

services, and by enhancing the

availability of financial services to the

public. Commenters argued that

removing the existing activity

restrictions would be consistent with 12

U.S.C. 1464(b)(1)(F) (which authorizes

Federal savings associations to establish

RSUs) and congressional intent

expressed in Section 2205 of the

Economic Growth and Regulatory

Paperwork Reduction Act of 1996

(which eliminates the requirement that

banks file branch applications for

ATMs).

Consistent with OTS’ goal of

minimizing regulatory restrictions on

electronic operations, proposed

§ 545.141 specifically permits Federal

savings associations to use electronic

means or facilities to perform any

authorized function or provide any

authorized product or service. Under

the new subpart, electronic means or

facilities include, but are not limited to

automated teller machines, automated

loan machines, personal computers, the

Internet, the World Wide Web,

telephones, and other similar electronic

devices.3 This authority now includes

the opening of savings or demand

accounts and the establishment of loan

accounts—functions previously

excluded from the definition of remote

service unit—because the performance

of these functions through electronic

means may enhance the operating

flexibility of Federal thrifts.

As part of this proposal, OTS is also

revising its branch office regulation to

clarify that electronic facilities do not

constitute a branch office.4

When May I Sell the Electronic

Capacities and By-Products That I Have

Acquired or Developed (Proposed

§ 545.142)

Under current § 545.138, a savings

association may engage in limited data

processing and data transmission

services, sell by-products incident to

those services, and sell excess capacity.

This authority, however, is subject to

significant constraints. For example,

under the current regulation, the

authorized processing of data generally

encompasses a recordkeeping function,

and does not include making risk-based

decisions through electronic means.

Moreover, the current OTS regulation

limits the ability of a Federal savings

association to sell or market data

processing and transmission services,

software, and excess capacity.

Several commenters suggested that

OTS should adopt a more flexible data

processing regulation. They urged OTS

to permit the fullest development and

use of data processing technology.

Commenters argued that savings

associations should not be restricted,

relative to other financial institutions, in

providing new electronic services to

customers. Accordingly, many

commenters suggested that OTS should
Federal Register / Vol. 62, No. 192 / Friday, October 3, 1997 / Proposed Rules 51819

5See 12 CFR 7.1019 (1997). Under this OCC

interpretation, ‘‘(a) national bank may, in order to

optimize the use of the bank’s resources, market

and sell to third parties electronic capacities

acquired or developed by the bank in good faith for

banking purposes.’’

6For example, bit lengths used by the industry to

authenticate the identity of users has increased over

the past few years from 40 to 56 bits. Certain

providers now use bit lengths in excess of 100 bits.

7 In certain cases, OTS has required (and may

require in the future on a case-by-case basis)

specific security precautions. For example, OTS has

required applicants to provide assurances of

adequate security over the Internet, including

adequate encryption and independent testing. See

OTS Order No. 95–88, Security First Network Bank

(May 8, 1995). In approving that application, OTS

required, among other things, the institution to

perform independent tests of the functionality and

security of its operations before and after initial

implementation.

8These commenters suggested various alternative

means for satisfying CRA requirements. For

example, commenters suggested that the banking

agencies should give CRA credit for loans made via

electronic means to low- or moderate-income

borrowers who reside outside the institution’s

service area.

provide data processing authority for

thrifts that is as expansive as that for

national banks. Several recommended

that OTS use the interpretations and

regulations recently issued by the Office

of the Comptroller of the Currency

(OCC) as a model for its regulation. 5

Commenters argued that consistent

regulations will facilitate joint ventures

between banks and thrifts and will

further the goal of ensuring uniformity

of regulation under section 303 of the

Community Development and

Regulatory Improvement Act. Only one

commenter, a data processing and

software company, argued that OTS

should not encourage thrifts to expand

their data processing operations or

software sales activities.

Proposed § 545.142 is more

permissive than the current data

processing services rule in that it

provides that a Federal savings

association may market and sell

electronic capacities and by-products to

third parties. The only condition

imposed is that the thrift must have

acquired or developed these capacities

and by-products in good faith as part of

providing financial services. This is

substantially identical to the condition

imposed on national banks by the OCC.

How May I Participate With Others in

the Use of Electronic Means and

Facilities? (Proposed § 545.143)

Proposed § 545.143 would permit a

savings association to participate with

others to perform, provide or deliver

activities, functions, products or

services described in proposed

§§ 545.141 and 545.142. A Federal

savings association may participate with

an entity that is not subject to

examination by a Federal agency

regulating financial institutions only if

that entity has agreed, in writing, to

permit OTS to examine its electronic

means or facilities, to pay for any

related OTS examination fees, and to

make all relevant records in its

possession, written or electronic,

available to OTS for examination.

The provisions governing

examination are not new requirements.

Current § 545.138(f) provides that if a

Federal savings association participates

with others to establish or maintain a

data processing office and the

participating entity is not subject to

examination by a Federal agency

regulating financial institutions, the

entity must agree, in writing, with OTS

that it will permit and pay for the

examination. Current § 545.141(f) also

contains a similar requirement where a

Federal savings association shares an

RSU with another entity.

If the participation by a Federal

savings association is through a service

corporation, OTS’ service corporation

rules apply. See 12 CFR 559.4 (1997).

What Security Precautions Must I Take?

(Proposed § 545.144)

In the ANPR, OTS asked whether it

should mandate a specific level of

encryption with regard to certain

electronic activities including the

Internet, or whether it should merely

permit general safety and soundness

principles to govern electronic

operations.

Several commenters argued that

security issues are manageable and

should be regulated only as a part of the

safety and soundness evaluation of each

institution. Other commenters

recommended specific security

procedures such as restricting the use of

reusable passwords as a means of

authentication where the password

would cross a network, or specifying a

particular type (or types) of encryption

for Internet transactions. One

commenter suggested that all

institutions should have written policies

and procedures to address firewall and

data security issues, and should

regularly test to assure that violations

are not occurring.

While OTS is extremely concerned

that Federal savings associations

establish appropriate security measures

when they engage in electronic

operations, the proposed rule does not

codify static security requirements.

Electronic security standards are

undergoing constant revision and

change.6 OTS believes that it is

impracticable to prescribe the security

measures for the indefinite future that

every thrift must implement when

methods of electronic commerce and

their attendant security measures are

continually evolving.

Instead, proposed § 545.144 provides

that a Federal savings association

should adopt standards and policies

that are designed to ensure secure

operations. In addition, a Federal thrift

must implement security measures

adequate to prevent unauthorized access

to its records and its customers’ records,

and to prevent financial fraud through

the use of electronic means or facilities.7

OTS expects Federal savings

associations to establish security

measures that are consistent with

current industry standards, and to

continually monitor and regularly

update these security procedures to

keep pace with changes to industry

standards. For example, the association

should maintain records documenting

attempts to gain unauthorized access to

its data base.

In addition, a Federal savings

association must comply with the

current security devices requirements of

Part 568 if it provides an automated

teller machine, an automated loan

machine, or other similar electronic

devices. These security requirements are

based on current §§ 545.138(d) and

545.141(e).

IV. Emerging Technologies

The ANPR asked for commenter input

on how other regulations, such as those

implementing the CRA, might be

affected as technology modifies how

and where depository institutions

provide services. OTS asked several

specific questions relating to the

application of the CRA to electronic

banking activities.

Several commenters predicted that

the current CRA requirements will

become increasingly problematic as

institutions offer more loans over the

Internet. These commenters urged OTS

to consult with the other banking

agencies and develop interagency CRA

guidelines to address the emerging

technologies.8 Other commenters urged

the banking agencies to defer the

issuance of any new CRA guidance until

regulators and financial institutions gain

more experience with electronic

banking services and the existing CRA

regulations.

To avoid unnecessary compliance

costs on the industry, OTS intends to

permit the new electronic technologies

to develop within the existing

framework of law and regulation. This

framework includes consumer

protection laws, such as the CRA

regulations, the Electronic Funds
51820 Federal Register / Vol. 62, No. 192 / Friday, October 3, 1997 / Proposed Rules

9However, OTS has concluded that a Federal

savings association may market and sell one type

of stored-value under the incidental powers

doctrine. See OTS Opinion Chief Counsel (August

21, 1996) (prepaid telephone cards).

10OTS, however, approved the nation’s first

Internet bank in 1995. More recently, OTS issued

an opinion that concluded that a Federal savings

association, through a service corporation or an

operating subsidiary, may offer its customers

banking services via an Internet connection to the

savings association’s home banking system, and

afford access to the Internet for non-banking

purposes to customers and others living in the

savings association’s service area. See Letter

Opinion Deputy Chief Counsel (April 14, 1997).

Transfer Act (Regulation E), safety and

soundness regulations, and other

applicable statutes and regulations. If

additional consumer protection or other

regulatory responses are necessary to

respond to emerging technologies, OTS

will take necessary steps in the future.

To the extent that the regulatory

response will require interagency

action, OTS will coordinate its response

with those of the other Federal banking

agencies.

In the ANPR, OTS specifically

requested comment on the appropriate

regulatory response to various emerging

technologies including stored-value

cards. The term ‘‘stored-value card’’

covers a wide range of products. In

general, these cards store information

and monetary value electronically on a

magnetic strip or computer chip, and

can be used to purchase goods and

services. There are significant

differences in how various systems store

monetary balances and transaction

information, and how they authorize

transactions. OTS regulations are

currently silent on stored-value

technology.9

The ANPR also raised several

questions regarding Internet banking

services. For example, OTS asked

whether it should impose any

restrictions or requirements on banking

over the Internet or whether it should

rely on general safety and soundness

principles to govern a safe system of

operation. The current OTS regulations

are also silent on Internet operations.10

Except for encryption and security

issues that are discussed above,

commenters generally feared that

premature regulation in this area would

stifle development, impose unnecessary

compliance costs that could deter

investment by thrifts, and require

extensive updating to keep abreast of

market changes. Commenters generally

concluded that it was neither necessary

nor appropriate to establish new

restrictions or requirements on these

operations until fundamental issues

involving these technologies are

resolved.

The increasing emergence of new

technologies underscores the

importance of granting thrifts broad

latitude to provide new services through

electronic means and facilities as these

means and facilities evolve. Rather than

extensive regulation in these areas, OTS

has chosen to permit thrifts to perform

any authorized function or to provide

any authorized product or service

through electronic means or facilities

including stored-value cards, the

Internet or other emerging electronic

technologies. As OTS gains additional

experience with electronic technology,

it may issue more specific guidance

regulating particular elements of

electronic operations. Until that time, a

Federal savings association’s exercise of

this authority remains subject to

existing safety and soundness

requirements, consumer protection

requirements, commercial law, and

other applicable requirements.

V. Request for Comments

OTS invites comment on all aspects of

the NPR. Commenters noted that several

trade associations have organized

committees and task forces to address

electronic operations. OTS welcomes

comment from these committees.

VI. Executive Order 12866

The Director of OTS has determined

that this proposed rule does not

constitute a ‘‘significant regulatory

action’’ for the purposes of Executive

Order 12866.

VII. Regulatory Flexibility Act Analysis

Pursuant to section 605(b) of the

Regulatory Flexibility Act, OTS certifies

that this proposed rule will not have a

significant impact on a substantial

number of small entities. The proposal

lowers regulatory burdens on all savings

associations, including small savings

associations.

VIII. Unfunded Mandates Act of 1995

Section 202 of the Unfunded

Mandates Reform Act of 1995, Public

Law 104–4 (Unfunded Mandates Act),

requires that an agency prepare a

budgetary impact statement before

promulgating a rule that includes a

Federal mandate that may result in

expenditure by state, local, and tribal

governments, in the aggregate, or by the

private sector, of $100 million or more

in any one year. If a budgetary impact

statement is required, section 205 of the

Unfunded Mandates Act also requires

an agency to identify and consider a

reasonable number of regulatory

alternatives before promulgating a rule.

As discussed in the preamble, this

proposed rule reduces regulatory

burden. OTS has determined that the

proposed rule will not result in

expenditures by state, local, or tribal

governments or by the private sector of

$100 million or more. Accordingly, this

rulemaking is not subject to section 202

of the Unfunded Mandates Act.

List of Subjects in 12 CFR Part 545

Accounting, Consumer protection,

Credit, Electronic funds transfers,

Investments, Reporting and

recordkeeping requirements, Savings

associations.

Accordingly, the Office of Thrift

Supervision hereby proposes to amend

part 545, chapter V, title 12, Code of

Federal Regulations as set forth below:

PART 545—OPERATIONS

The authority citation for part 545

continue to read as follows:

Authority: 12 U.S.C. 1462a, 1463, 1464,

1828.

2. Existing §§ 545.1 through 545.135

are designated as subpart A and the

subpart heading is added to read as

follows:

Subpart A—Operations

* * * * *

3. Section 545.92 is amended by

revising paragraph (a) to read as follows:

§ 545.92 Branch offices.

(a) General. A branch office of a

Federal savings association is any office

other than its home office, agency office,

administrative office, data processing

office, or electronic facility under

subpart B of this part.

* * * * *

§§ 545.138 through 545.142 [Removed]

4. Sections 545.138 through 545.142

are removed.

5. A new subpart B is added to part

545 to read as follows:

Subpart B—Electronic Operations

§ 545.140 What does this subpart do?

§ 545.141 How may I use electronic means

and facilities?

§ 545.142 When may I sell electronic

capacities and by-products that I have

acquired or developed?

§ 545.143 How may I participate with

others in the use of electronic means and

facilities?

§ 545.144 What security precautions must I

take?

§ 545.140 What does this subpart do?

This subpart describes how a Federal

savings association (‘‘you’’) may provide

products and services through

electronic means and facilities.
Federal Register / Vol. 62, No. 192 / Friday, October 3, 1997 / Proposed Rules 51821

§ 545.141 How may I use electronic means

and facilities?

You may use electronic means or

facilities to perform any authorized

function, or provide any authorized

product or service. Electronic means or

facilities include, but are not limited to

automated teller machines, automated

loan machines, personal computers, the

Internet, the World Wide Web,

telephones, and other similar electronic

devices.

§ 545.142 When may I sell electronic

capacities and by-products that I have

acquired or developed?

You may market and sell electronic

capacities and by-products to thirdparties if you acquired or developed

these capacities and by-products in

good faith as part of providing financial

services.

§ 545.143 How may I participate with

others in the use of electronic means and

facilities?

You may participate with others to

perform, provide, or deliver through

electronic means and facilities any

activity, function, product, or service

described under §§ 545.141 and

545.142. If the participating entity is not

subject to examination by a Federal

agency regulating financial institutions,

you may participate with that entity

only if it has agreed in writing with the

OTS that it will:

(a) Permit the examination of its

electronic means or facilities, as the

OTS deems necessary;

(b) Pay for any related OTS

examination fees; and

(c) Make all relevant records in its

possession, written or electronic,

available to the OTS for examination.

§ 545.144 What security precautions must

I take?

If you use electronic means and

facilities under this subpart, you should

adopt standards and policies that are

designed to ensure secure operations.

You must implement security measures

adequate to prevent:

(a) Unauthorized access to your

records and your customers’ records;

and

(b) Financial fraud through the use of

electronic means or facilities. If you

provide an automated teller machine, an

automated loan machine, or other

similar electronic devices, you must

comply with the security devices

requirements of part 568 of this chapter.

Dated: September 26, 1997.

By the Office of Thrift Supervision.

Nicolas P. Retsinas,

Director.

[FR Doc. 97–26104 Filed 10–2–97; 8:45 am]

BILLING CODE 6720–01–P

DEPARTMENT OF DEFENSE

Defense Special Weapons Agency

32 CFR Part 318

[DSWA Instruction 5400.11B]

Defense Special Weapons Agency

Privacy Program

AGENCY: Defense Special Weapons

Agency, DOD.

ACTION: Proposed rule.

SUMMARY: The Defense Special Weapons

Agency (DSWA) is proposing to add two

sections to its procedural rule for the

DSWA Privacy Program. The two

sections are entitled Disclosure of

record to persons other than the

individual to whom it pertains and

Fees. The addition of these two sections

helps an individual to better understand

the DSWA Privacy Program.

DATES: Comments must be received on

or before December 2, 1997.

ADDRESSES: Send comments regarding

this proposed rule to the General

Counsel, Defense Special Weapons

Agency, 6801 Telegraph Road,

Alexandria, VA 22310–3398.

FOR FURTHER INFORMATION CONTACT: Mrs.

Sandy Barker at (703) 325–7681.

SUPPLEMENTARY INFORMATION:

Executive Order 12866. It has been

determined that this Privacy Act

proposed rule for the Department of

Defense does not constitute ‘significant

regulatory action’. Analysis of the rule

indicates that it does not have an annual

effect on the economy of $100 million

or more; does not create a serious

inconsistency or otherwise interfere

with an action taken or planned by

another agency; does not materially alter

the budgetary impact of entitlements,

grants, user fees, or loan programs or the

rights and obligations of recipients

thereof; does not raise novel legal or

policy issues arising out of legal

mandates, the President’s priorities, or

the principles set forth in Executive

Order 12866 (1993).

Regulatory Flexibility Act. It has been

determined that this Privacy Act

proposed rule for the Department of

Defense does not have significant

economic impact on a substantial

number of small entities because it is

concerned only with the administration

of Privacy Act systems of records within

the Department of Defense.

Paperwork Reduction Act. It has been

determined that the Privacy Act

proposed rule for the Department of

Defense imposes 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.

The Defense Special Weapons Agency

(DSWA) is proposing to add two

sections to its procedural rule for the

DSWA Privacy Program. The two

sections are entitled Disclosure of

record to persons other than the

individual to whom it pertains and

Fees. The addition of these two sections

helps an individual to better understand

the DSWA Privacy Program.

List of Subjects in 32 CFR Part 318

Privacy.

Accordingly, the Defense Special

Weapons Agency amends 32 CFR part

318 as follows:

PART 318–DEFENSE SPECIAL

WEAPONS AGENCY PRIVACY

PROGRAM-[AMENDED]

1. The authoritiy citation for 32 CFR

part 318 continues to read as follows:

AUTHORITY: Pub. L. 93–579, 88 Stat.

1896 (5 U.S.C. 552a).

§ 318.9 [Redesignated as § 318.11]

2. Section 318.9 is redesignated as

318.11.

3. Sections 318.9 and 318.10 are

added to read as follows:

§ 318.9 Disclosure of record to persons

other than the individual to whom it

pertains.

(a) General. No record contained in a

system of records maintained by DSWA

shall be disclosed by any means to any

person or agency within or outside the

Department of Defense without the

request or consent of the subject of the

record, except as described in 32 CFR

part 310.41, Appendix C to part 310,

and/or a Defense Special Weapons

Agency system of records notice.

(b) Accounting of disclosures. Except

for disclosures made to members of the

DoD in connection with their official

duties, and disclosures required by the

Freedom of Information Act, an

accounting will be kept of all

disclosures of records maintained in

DSWA system of records.

(1) Accounting entries will normally

be kept on a DSWA form, which will be

maintained in the record file jacket, or

in a document that is part of the record.

(2) Accounting entries will record the

date, nature and purpose of each

disclosure, and the name and address of