[Federal Register Volume 60, Number 68 (Monday, April 10, 1995)]
[Proposed Rules]
[Pages 18036-18038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8337]



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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 792


Addition of Specific Exemptions Under the Privacy Act

AGENCY: National Credit Union Administration.

ACTION: Proposed rule.

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SUMMARY: The National Credit Union Administration (NCUA) is proposing 
to amend its regulations pertaining to exemptions of the NCUA's Privacy 
Act Systems of Records. These amendments are necessary to reflect the 
addition of the (j)(2) and (k)(2) exemptions of the Privacy Act to the 
NCUA regulations that describe exempt systems of records, and to 
clearly link the ``Office of Inspector General (OIG) Investigative 
Records--NCUA,'' system NCUA- 20, to these Privacy Act exemptions.

DATES: Comments must be postmarked or posted to the NCUA Electronic 
Bulletin Board by May 10, 1995. Comments postmarked or posted by 
Electronic Bulletin Board after this date will be considered if it is 
practical to do so, but the NCUA is able to assure consideration only 
for comments that are received on or before this date.

ADDRESSES: Send comments to Becky Baker, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, VA 
22314, or post comments to the NCUA Electronic Bulletin Board at 800 
876-1684 or 703 518-6480. Comments received may be examined at the 
Office of Inspector General, 5th floor, NCUA Building, 1775 Duke 
Street, Alexandria, VA.

FOR FURTHER INFORMATION CONTACT: Alexandra B. Keith, Counsel to the 
Inspector General, Office of Inspector General, National Credit Union 
Administration, 5th floor, 1775 Duke Street, Alexandria, VA, 22314, 
Telephone: 703-518-6352.

SUPPLEMENTARY INFORMATION: In 1989, in response to the Inspector 
General Act Amendments, P.L. 100-504, the National Credit Union 
Administration Board established a statutorily designated Inspector 
General (IG), to whom the functions of the former NCUA Office of 
Internal Auditor, were transferred. The functions of NCUA's Office of 
Inspector General (OIG) include: (1) The detection and prevention of 
waste, fraud, and abuse and (2) the promotion of economy and efficiency 
in NCUA programs and operations. As one of its principal functions, the 
OIG performs investigations into alleged violations of criminal law in 
connection with NCUA's programs and operations, pursuant to the IG Act 
of 1978, as amended. In conjunction with these functions, OIG reports 
suspected violations of criminal and civil law to the U.S. Attorney 
General.
    Section (j)(2) of the Privacy Act (5 U.S.C. 552a (j)(2)) permits 
the head of an agency to promulgate rules to exempt a system of records 
from certain requirements if the system is maintained by an agency 
component or sub component whose principal function pertains to the 
enforcement of criminal laws and if the system of records is compiled 
for a criminal law enforcement purpose. Accordingly, to the extent it 
includes this kind of records, the OIG Investigative Records system of 
records is exempt from the following sections of 552a of Title 5 
U.S.C.: (c)(3), (c)(4), (d), (e)(1),(e)(2),(e)(3), (e)(4)(G), 
(e)(4)(H), (e)(4)(I), (e)(5), (e)(8), (f), and (g), as well as from the 
corresponding regulatory subsections.
    Section (k)(2) (Title 5 USC 552a(k)(2)) permits exemption from 
certain requirements if the system consists of investigatory material 
compiled for law enforcement purposes, other than material within the 
scope of subsection (j)(2); Provided however, that if any individual is 
denied any right, privilege, or benefit that he or she would otherwise 
be entitled to by Federal law, or for which he or she would otherwise 
be eligible, as a result of the maintenance of such material, such 
material shall be provided to such individual except to the extent that 
the disclosure of such material would reveal the identity of a source 
who furnished information to the Government under an express promise 
that the identity of the source would be held in confidence, or prior 
to January 1, 1975, under an implied promise that the identity of the 
source should be held in confidence. Accordingly, to the extent that it 
includes this kind of records, this system of records is also exempt 
under Section (k)(2) from the following sections of 552a of Title 5 
U.S.C.: (c)(3);(d); (e)(1); (e)(4)(G), (H), and (I); and (f), as well 
as from the corresponding regulatory subsections. This proposed rule, 
amending 12 CFR 792.34, would make NCUA's regulations consistent with 
those of the majority of agencies with statutory IG's.
    Elsewhere in today's Federal Register there is a Notice describing 
this system of records.
    Exemptions from the particular subsections are justified for the 
following reasons:
    Section 552a(c)(3) of title 5 U.S.C. requires an agency to make the 
accounting of each disclosure of records available to the individual 
named in the record at his/her request. This accounting must state the 
date, nature and purpose of each disclosure of a record and the name 
and address of the recipient. Accounting for each disclosure could 
alert the subject of an investigation to the existence and nature of 
the investigation and reveal investigative or prosecutive interest by 
other agencies, especially in a joint investigation situation. This 
could seriously impede or compromise an investigation and case 
preparation by prematurely revealing its existence and nature; 
compromise or interfere with witnesses reluctant to cooperate with the 
investigators; lead to suppression, alteration, fabrication or 
destruction or evidence; and endanger the physical safety of 
confidential sources, witnesses, law enforcement personnel and their 
families.
    Section 552a(c)(4) of title 5 U.S.C. requires an agency to inform 
outside parties of amendments to and notation of disputes about 
information in a system in accordance with subsection (d) of the 
Privacy Act. Because this system of records is exempted from the 
amendment provisions of subsection (d) of the Privacy Act by this rule, 
this section is not properly applicable.
    Sections 552a(d) and (f) of title 5 U.S.C. require an agency to 
provide access to records, make corrections, and amendments to records, 
and notify individuals of the existence of records upon their request. 
Providing individuals with the access to records of an investigation 
and the right to contest the contents of those records and force 
[[Page 18037]] 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 the 
access 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 with 
investigators; lead to suppression, alteration, fabrication, or 
destruction of evidence; endanger the physical safety of confidential 
sources, witnesses, law enforcement personnel and their families, and 
result in the secreting of or other disposition of assets that would 
make them difficult or impossible to reach to satisfy any Government 
claims growing out of the investigation.
    Section 552a(e)(1) of title 5 U.S.C. requires an agency to maintain 
in agency records only ``relevant and necessary'' information about an 
individual. This provision is inappropriate for investigations, 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. In other 
cases, what may appear to be a relevant and necessary piece of 
information may become irrelevant in light of further investigation.
    In addition, during the course of an investigation, the 
investigator may obtain information that relates primarily to matters 
under the investigative jurisdiction of another agency (e.g., the 
fraudulent use of Social Security numbers) and that information may not 
be reasonably segregated. In the interests of effective law 
enforcement, OIG investigators should retain this information, because 
it can aid in establishing patterns of criminal activity and can 
provide valuable leads for Federal and other law enforcement agencies.
    Section 552a(e)(2) of title 5 U.S.C. requires an agency to collect 
information to the greatest extent practicable directly from the 
subject individual, when the information may result in adverse 
determinations about an individual's rights, benefits and privileges 
under Federal programs.
    The general rule that information be collected ``to the greatest 
extent practicable'' from the target individual is not appropriate in 
investigations. OIG investigators should be authorized to use their 
professional judgment as to the appropriate sources and timing of an 
investigation. Often it is necessary to conduct an investigation so 
that the target does not suspect that he or she is being investigated. 
The requirement to obtain the information from the targeted individual 
may put the suspect on notice of the investigation and thereby thwart 
the investigation by enabling the suspect to destroy evidence and take 
other action that would impede the investigation. This requirement may 
also in some cases preclude an OIG investigator from gathering 
information and evidence before interviewing an investigative target in 
order to maximize the value of the interview by confronting the target 
with evidence or information. Moreover, in certain circumstances, the 
subject of an investigation cannot be required to provide information 
to investigators and information must be collected from other sources. 
Furthermore, it is often necessary to collect information from sources 
other than the subject of the investigation to verify the accuracy of 
the evidence collected.
    In addition, the statutory term, ``to the greatest extent 
practicable,'' is a subjective standard, and it is impossible 
adequately to define the term so that individual OIG investigators can 
consistently apply it to the many fact patterns encountered in OIG 
investigations.
    Section 552a(e)(3) of title 5 U.S.C. requires an agency to inform 
each person whom it asks to supply information, on a form that can be 
retained by the person, of the authority under which the information is 
sought and whether disclosure is mandatory or voluntary; of the 
principal purpose for which the information is intended to be used; of 
the routine uses which may be made of the information; and of the 
effects on any person, if any, of not providing all or any part of the 
required information. The application of this provision could provide 
the subject of an investigation with substantial information about the 
nature of that investigation. Moreover, providing such a notice to the 
subject of an investigation could seriously impede or compromise an 
investigation by revealing its existence and could endanger the 
physical safety of confidential sources, witnesses, and investigators 
by revealing their identities.
    Sections 552a(e)(4)(G) and (H) of title 5 U.S.C. require an agency 
to publish in the Federal Register notice concerning its procedures for 
notifying an individual at his/her request, if the system of records 
contains a record pertaining to him/her, how to gain access to such a 
record and how to contest its content. Since this system of records is 
being exempted from subsection (f) of the Privacy Act, concerning 
agency rules, and subsection (d) of the Act, concerning access to 
records, these requirements are inapplicable to the extent that the 
system of records would be exempt from those subsections.
    Section 552a(e)(4)(I) of title 5 U.S.C. requires an agency to 
publish notice of categories of sources of records in the system of 
records. To the extent that this provision is constructed 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, to 
protect privacy and information, and to avoid the disclosure of 
investigative techniques and procedures.
    Section 552a(e)(5) of title 5 U.S.C. requires an agency to maintain 
its records with such accuracy, relevance, timeliness, and completeness 
as is reasonably necessary to assure fairness to the individual in 
making any determination about the individual. Much the same rationale 
is applicable to this proposed exemption as that set forth previously 
in item (d) (duty to maintain in agency records only ``relevant and 
necessary information'' about an individual.) While the OIG makes every 
effort to maintain records that are accurate, relevant, timely and 
complete, it is not always possible in an investigation to determine 
with certainty that all the information collected is accurate, 
relevant, timely, and complete. During a thorough investigation, a 
trained investigator would be expected to collect allegations, 
conflicting information, and information that may not be based upon the 
personal knowledge of the provider. At the point of determination by 
OIG to refer a matter to a prosecutive agency, for example, that 
information would be in the system of records, and it may not be 
possible until further investigation is conducted, or indeed in many 
cases until a trial (if at all) to determine the accuracy, relevance, 
and completeness of some information. This requirement would inhibit 
the ability of trained investigators to exercise professional judgment 
in conducting a thorough investigation. Moreover, fairness to affected 
individuals is assured by the due process they are accorded in any 
trial or other proceeding resulting from the OIG investigation.
    Section 552a(e)(8) of title 5 U.S.C. requires an agency to make 
reasonable efforts to serve notice on an individual when any record on 
such individual is [[Page 18038]] made available under compulsory legal 
process when such process becomes a matter of public record. Compliance 
with this provision could prematurely reveal and compromise an ongoing 
criminal investigation to the target of the investigation and reveal 
confidential investigative techniques, procedures, or evidence.
    Section 552a(g) of title 5 U.S.C. provides for civil remedies if an 
agency fails to comply with the requirements concerning access to 
records under subsections (d)(1) and (3) of the Act; maintenance of 
records under subsection (e)(5) of the Act; and any other provision of 
the Act or any rule promulgated thereunder in such a way as to have an 
adverse effect on an individual. The system would be exempt from many 
of the Act's requirements; it is unnecessary and contradictory to 
provide for civil remedies from violations of those provisions in 
particular.

Regulatory Flexibility Certification

    As required by the Regulatory Flexibility Act (5 U.S.C. 605(b)), 
the NCUA certifies that this rule does not have a significant economic 
impact on a substantial number of small entities. The amendments to 12 
CFR are procedural in nature and will aid an NCUA office to perform its 
criminal law enforcement function.

Paperwork Reduction Act Statement

    This proposed rule contains no information collection requirements 
and therefore is not subject to the requirements of the Paperwork 
Reduction Act of 1980 (44 U.S.C. 3501 et seq.)

Executive Order 12612

    This amendment to NCUA's systems of record notice does not affect 
state regulation of credit unions.

List of Subjects in 12 CFR Part 792

    Criminal penalties, Freedom of Information, Privacy, Reporting and 
record keeping requirements, Sunshine Act.

    By the National Credit Union Administration Board on March 30, 
1995.
Becky Baker,
Secretary of the Board.

    For the reasons set out in the preamble and under the authority of 
the Federal Credit Union Act of 1934, as amended; and 5 U.S.C. 552, 
552a, and 553, the NCUA is proposing to adopt the following amendments 
to 12 CFR part 792.

PART 792--[AMENDED]

Subpart B-The Privacy Act

    1. The authority citation for Part 792 is revised to read as 
follows:

    -Authority: 12 U.S.C. 1766(a) and 1789(a)(7); 5 U.S.C. App. 3. 
Subpart B is also issued under 5 U.S.C. 552a.

    2. In Sec. 792.34, a new paragraph (b)(3) is added to read as 
follows:


Sec.  792.34  Exemptions.

* * * * *
    (b) * * *
    (3) System NCUA-20, entitled, ``Office of Inspector General (OIG) 
Investigative Records,'' consists of OIG records of closed and pending 
investigations of individuals alleged to have been involved in criminal 
violations. The records in this system are exempted pursuant to 
Sections (k)(2) of the Privacy Act, 5 U.S.C. 552a(k)(2), from sections 
(c)(3); (d); (e)(1); (e)(4)(G); (e)(4)(H); (e)(4)(I); and (f). The 
records in this system are also exempted pursuant to section (j)(2) of 
the Privacy Act, 5 U.S.C. 552a(j)(2), from sections (c)(3); (c)(4); 
(d); (e)(1); (e)(2); (e)(3); and (g).

[FR Doc. 95-8337 Filed 4-7-95; 8:45 am]
BILLING CODE 7535-01-U -