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[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).
---------------------------------------------------------------------------

    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]
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