Exchange of Coin
| Citation | 86 FR 23877 |
| Record Number | 2021-09338 |
| Published date | 05 May 2021 |
| Court | United States Mint |
Federal Register, Volume 86 Issue 85 (Wednesday, May 5, 2021)
[Federal Register Volume 86, Number 85 (Wednesday, May 5, 2021)]
[Proposed Rules]
[Pages 23877-23880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09338]
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DEPARTMENT OF THE TREASURY
United States Mint
31 CFR Part 100
Exchange of Coin
AGENCY: United States Mint, Department of the Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The United States Mint proposes to revise its regulations
relating to the exchange of uncurrent, bent, partial, fused, and mixed
coins. The proposed revisions will enhance the integrity of the
redemption process for bent and partial United States coins and prevent
fraud.
DATES: Send comments on or before July 6, 2021.
ADDRESSES: The United States Mint invites comments on all aspects of
this proposed revision. You may send comments by any of the following
methods:
Federal eRulemaking Portal: www.regulations.gov. Follow
the instructions for sending comments.
Mail: Submit all written comments to Mutilated Coin
Redemption Program; Manufacturing Directorate; United States Mint, 801
9th Street NW, Washington, DC 20220.
Hand Delivery/Courier: Same as mail address.
Instructions: All submissions received must include the agency name
for this rulemaking. All comments received will be posted without
change to regulations.gov, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Apryl Whitaker, Senior Legal Counsel,
Office of the Chief Counsel, United States Mint, at (202) 354-7938 or
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
The Treasury Regulations appearing at 31 CFR part 100, subpart C,
are promulgated under 31 U.S.C. 5120, and relate to the exchange of
uncurrent, bent, partial, fused, and mixed coins. The last amendment to
31 CFR part 100, subpart C, was on December 20, 2017. Since then, the
United States Mint has identified additional portions of the
regulations in need of revision to further enhance the integrity of the
redemption process for bent and partial United States coins.
For many years, the United States Mint has redeemed bent and
partial coins for full face value. The policy's objective was always to
maintain public confidence in United States coinage and protect the
integrity of the currency by removing coins that were unfit for
circulation through general wear and tear. However, in recent years,
the volume of coins submitted for possible redemption has greatly
increased. Additionally, the condition of many coins submitted for
examination precludes effective authentication. Rather than removing
damaged coins from general domestic coin circulation, as was the
intended purpose, many participants are seeking to submit large
quantities of coins that, in some cases, have already been removed from
general circulation (e.g., recovered from scrap or trash processing),
or in other cases, are extremely difficult to authenticate due to their
condition and volume. Finally,
[[Page 23878]]
there are indicators of current counterfeit coin fraud schemes aimed at
the Mutilated Coin Redemption Program, which the revisions are
specifically designed to deter. The United States Mint has hired
additional staff and developed improved authentication procedures and
testing methodology for coin redemptions to ensure that only genuine
U.S. coins are accepted for redemption.
II. This Proposed Rule
The first category of proposed revisions would update and improve
the efficiency and security of the redemption process for bent and
partial coins. These revisions would provide notice that the United
States Mint will establish weight and shipment limits for at a maximum
of 1,000 lbs. of coins per month per participant. To implement improved
testing and authentication methods for determining the genuineness of
coins, the United States Mint will process all future redemptions at
its Philadelphia location, which has new equipment and staff capable of
performing detailed analyses of coins submitted for redemption.
Previously, the United States Mint directed approved bulk redeemers to
ship submissions directly to authorized recyclers. Large shipments sent
to our recyclers created storage and material control issues during the
time necessary for sampling and authentication before melting. A 1,000
lb. limit is necessary to ensure effective controls so that each
submission may be carefully reviewed to ensure that only genuine U.S.
coinage is redeemed. Under these limits, participants are not
guaranteed the right to submit 1,000 lbs. per month. The United States
Mint Philadelphia facility's capacity to process mutilated coins is
limited by physical storage capacity, caseload complexity, submission
size, and workload. Improved authentication procedures extend the time
required for sampling and evaluation, and the amount of time needed to
properly authenticate and then process each submission varies. Given
the intent of the program, which is to allow for the removal of bent or
partial coins from circulation (and not recycling recovered coin from
scrap or trash), the proposed weight limit and scheduling restrictions
propose a reasonable balance between a discretionary service offered to
the public to redeem bent or partial coins received in good faith in
commerce and protection against fraud.
The second category of proposed revisions would prohibit redemption
if a submission contains coins imported from outside of the United
States. The United States Mint has learned of fraud schemes where large
amounts of counterfeit coins are manufactured overseas in an attempt to
defraud the Government. A high percentage of counterfeits have been
identified in imported coins intercepted by law enforcement, as well in
as several large submissions to the Mutilated Coin Redemption Program.
It is extremely difficult to trace and verify the chain of custody of
coins imported from outside of the United States given that the
majority of coins coming from abroad are represented to have been found
in scrap that has been processed and sold multiple times over. Another
consideration is that such coins have been effectively removed from the
domestic coin circulation for which the redemption program aims to
replace bent or partial coins. A prohibition on imported coins reduces
the risk of fraud on the program. The proposed revisions also clarify
that coins damaged in industrial processes (such as shredders,
burnishers, incinerators, exposure to elevated temperatures), or coins
that have been drilled, punctured, ground, polished, etched, or
chemically treated by any industrial or recycling process, are not
eligible for redemption. Such coins present a high risk of being
counterfeit because they are difficult and time-consuming to evaluate
and require increased resources to determine whether they are genuine.
The regulations already require coins to be readily and clearly
identifiable as to genuineness and denomination. The proposed revisions
seek to provide examples from the United States Mint's experience of
coins that by their nature are difficult to evaluate and cannot be
``readily and clearly identifiable'' as genuine.
The third category of proposed revisions clarifies the roles and
responsibilities of the United States Mint and participants. For
example, the proposed revisions clarify under what circumstances a
participant will have the opportunity to retrieve a rejected shipment,
and under what circumstances an entire submission will be turned over
to law enforcement authorities. The purpose is to clearly put members
of the public on notice of the potential consequences of submitting
coins for examination that are prohibited from redemption. For example,
if a submission contains counterfeit coins, the United States Mint will
turn the entire submission over to law enforcement.
III. Procedural Analysis
Regulatory Planning and Review
The Office of Management and Budget has determined that this
proposed rule does not constitute a ``significant regulatory action''
under Executive Order 12866 or Executive Order 13771.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)) (PRA), the United States Mint is seeking approval for a new
information collection of data and reporting requirements applicable to
participants seeking to redeem bent or partial coins. The proposed
collection of information described in this notice of proposed
rulemaking has been submitted to the Office of Management and Budget
(OMB) for review in accordance with the PRA under OMB No. 1525-NEW.
Comments on the collection of information should be sent to the
Office of Management and Budget, Attn: Desk Officer for the Department
of the Treasury, Office of Information and Regulatory Affairs,
Washington, DC 20503, or via email to [email protected], with
copies to Mutilated Coin Redemption Program; Manufacturing Directorate;
United States Mint, 801 9th Street NW, Washington, DC 20220. Comments
on the collection of information should be received by July 6, 2021.
In accordance with 5 CFR 1320.8(d)(1), the Department of the
Treasury is soliciting comments from members of the public concerning
this collection of information to:
(1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of
the proposed collection of information;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of information on those
who are to respond, including through the use of appropriate automated
collection techniques or other forms of information technology.
The form for OMB No. 1525-NEW proposed in the information
collection rulemaking is as follows:
United States Mint Mutilated Coin Redemption Program Instructions
and Application Form, Mint Form MF 6006:
[[Page 23879]]
The burden of the information collections in this proposed rule is
estimated as follows:
Estimated total annual reporting and/or recordkeeping burden: 200
hours.
Estimated average annual burden per respondent: 1 hour.
Estimated number of respondents: 200.
Estimated annual frequency of responses: Annually.
Under the PRA, an agency may not conduct or sponsor, and a person
is not required to respond to, a collection of information unless it
displays a valid control number assigned by the Office of Management
and Budget.
Regulatory Flexibility Act Analysis
It is hereby certified that the proposed revisions will not have a
significant economic impact on a substantial number of small entities.
First and foremost, the regulations do not directly regulate any
entities. The redemption of uncurrent, bent, or partial coins is a
discretionary service offered to the public; participation is
voluntary.
Second, the number of entities tendering significant quantities of
coins for redemption is small. A large number of entities redeeming
coins are individuals. A wide variety of businesses, such as municipal
entities, recyclers, coin processors, amusement parks, auto shops, and
waste management companies, also have applied for coins to be redeemed
in the past. With the proposed limit of 1,000 lbs. per month, that is,
at most, equivalent to $240,000 a year. In Fiscal Years (FY) 2014,
2013, and 2012, the United States Mint paid only nine entities more
than $240,000. In FY 2011, there were 14, and FY 2010 there were 12.
With respect to the proposed ban on coins imported from outside the
United States, about 20 applicants listed ``overseas'' as the source of
their coins on their applications submitted from 2018 to 2019. With
respect to the proposed ban on coins that have been through industrial
processes, about 20 applicants listed ``recycling'' as the source of
their coins on their applications submitted from 2018 to 2019.
Even if each entity qualified as a ``small entity'' within the
meaning of 5 U.S.C. 605(b), based on a review of past applications as
described above, the United States Mint does not believe that the
proposed revisions are likely to have a significant economic impact.
The proposed rule does not change the redemption rates. Moreover, the
regulations already require coins to be readily and clearly
identifiable as to genuineness and denomination. The proposed revisions
seek to provide guidance from the United States Mint's experience of
coins that by their nature are difficult to evaluate and cannot be
``readily and clearly identifiable'' as genuine. Notwithstanding this
certification, the United States Mint invites comments on the impacts
this rule may have on small entities.
IV. Request for Comment
Before the proposed revisions to the Treasury Regulations at 31 CFR
part 100, subpart C, are adopted as final regulations, the United
States Mint will consider any comments that are submitted to the bureau
as prescribed in this preamble under the DATES and ADDRESSES sections.
The United States Mint and the Department of the Treasury request
comments on all aspects of the proposed revisions to these regulations,
including the effects on stakeholders of the 1,000 lb. monthly limit
and suggestions for alternative ways to achieve a balance between
providing for the removal of bent or partial coins, cost, and
prevention of fraud.
List of Subjects in 31 CFR Part 100
Coins.
Words of Issuance
For the reasons set forth in the preamble, the United States Mint
proposes to amend 31 CFR part 100 as follows:
PART 100--EXCHANGE OF PAPER CURRENCY AND COIN
0
1. The authority for part 100 continues to read as follows:
Authority: 31 U.S.C. 321.
0
2. Subpart C is revised to read as follows:
Subpart C--Request for Examination of Coin for Possible Redemption
Sec.
100.10 Request for examination of uncurrent coin for possible
redemption.
100.11 Request for examination of bent or partial coin for possible
redemption.
100.12 Exchange of fused or mixed coin.
100.13 Notices.
Sec. 100.10 Request for examination of uncurrent coin for possible
redemption.
(a) Definition. Uncurrent coins are whole U.S. coins that are
merely worn or reduced in weight by natural abrasion yet are readily
and clearly recognizable as to genuineness and denomination and which
are machine countable.
(b) Redemption process. The United States Mint will not accept
uncurrent coins for redemption. Members of the public wishing to redeem
lawfully held uncurrent coins must deposit the uncurrent coins with a
bank or other financial institution that will accept them, or with a
depository institution that has established a direct customer
relationship with a Federal Reserve Bank. A Federal Reserve Bank will
redeem uncurrent coins, based on the policies described in the Federal
Reserve's Operating Circular 2.
(c) Criteria for acceptance. Depository institutions that redeem
uncurrent coins must sort the coins by denomination into packages in
accordance with the Federal Reserve's Operating Circular 2. The Federal
Reserve Banks have the right to reject any shipment containing objects
that are not U.S. coins or any contaminant that could render the
uncurrent coins unsuitable for coinage metal.
(d) Redemption sites. The Federal Reserve Banks and branches listed
in Sec. 100.17 are the only authorized redemption sites at which a
depository institution that has established a direct customer
relationship with a Federal Reserve Bank may redeem uncurrent coins.
Sec. 100.11 Request for examination of bent or partial coin for
possible redemption.
(a) General. Lawfully held bent or partial coins of the United
States may be submitted to the United States Mint for examination in
accordance with the provisions in this subpart. Any submission under
this subpart shall be deemed an acceptance of all provisions of this
subpart.
(b) Definitions. (1) Bent coins are U.S. coins that are bent or
deformed so as to preclude normal machine counting but which are
readily and clearly identifiable as to genuineness and denomination.
(2) Partial coins are U.S. coins that are not whole; partial coins
must be readily and clearly identifiable as to genuineness and
denomination.
(3) Participants are individuals or businesses that submit coins
through the redemption process.
(c) Redemption process. (1) Depending on submission amount and
frequency, participants may be subject to a certification process by
the United States Mint. The established annual weight threshold and
details about the participant certification process will be published
on the United States Mint's website. If certification is required, it
must be completed prior to submission.
(2) All submissions for review shall include an estimate of the
value of the coins and an explanation of how the submission came to be
bent or partial. The submission should also contain the
[[Page 23880]]
bank account number and routing number for a checking or savings
account at a bank or other financial institution (such as a mutual
fund, brokerage firm, or credit union) in the United States.
(3) Participants will be required to provide information for how
the participant came into custody of the bent or partial coins. The
United States Mint reserves the right to request additional
information.
(4) The United States Mint reserves the right to test samples from
any submission to authenticate the genuineness of the coins. The size
of the sample will be limited to the amount necessary for
authentication. Testing may result in partial or complete destruction
of the sample.
(5) The United States Mint reserves the right to conduct site
visits to verify information provided to the United States Mint.
(6) Each participant is limited to submitting no more than 1,000
lbs. of coins per month.
(7) No redemption will be made when:
(i) A submission contains any counterfeit coins;
(ii) A submission demonstrates a pattern of systematic or
intentional mutilation or demonstrates an attempt to defraud the United
States;
(iii) A submission appears to be part of, or intended to further,
any criminal activity;
(iv) A submission contains a material misrepresentation of facts;
(v) Material presented is not identifiable as United States coins;
(vi) A submission contains any contaminant that could render the
coins unsuitable for coinage metal or contains hazardous materials;
(vii) A submission contains more than a nominal amount of uncurrent
coins;
(viii) A submission contains coins imported from outside of the
United States; or
(ix) A submission, contains coins damaged in industrial or
recycling processes (such as shredders, burnishers, incinerators,
exposure to elevated temperatures), or coins that have been drilled,
punctured, ground, polished, etched, or chemically treated.
(8) If redemption is denied on the basis of paragraph (c)(7)(i),
(ii), (iii), or (iv) of this section, the entire submission will be
turned over to law enforcement authorities. Counterfeit coins and the
entire submission may be subject to forfeiture under 18 U.S.C. 492.
(9) If redemption is denied on the basis of paragraph (c)(7)(v),
(vi), (vii), (viii), or (ix) of this section, the participant will be
notified to retrieve the entire submission, at the participant's sole
expense, within 30 days. If the submission is not retrieved in a timely
manner, the entire submission will be treated as voluntarily abandoned
property, pursuant to 41 CFR 102-41.80, and will be retained or
disposed of by the United States Mint.
(10) The Director of the United States Mint, or designee, shall
have final authority with respect to all aspects of redemptions of bent
or partial coin submissions.
(d) Redemption rates--(1) Generally. Participants shall separate
bent or partial coins by denomination in lots of at least one pound for
each denomination category. The United States Mint will redeem bent or
partial coins on the basis of their weight and denomination at the
following rates:
(i) One-Cent Coins: $1.4585 per pound.
(ii) 5-Cent Coins: $4.5359 per pound.
(iii) Dime, Quarter-Dollar, and Half-Dollar Coins: $20.00 per
pound.
(iv) $1 Coins: $20.00 per pound.
(2) Exceptions. (i) The United States Mint will redeem one-cent
coins inscribed with a year after 1982 at the rate set forth at
paragraph (d)(1)(i) of this section unless such one-cent coins are
presented unmixed from one-cent coins inscribed with a year before
1983. The United States Mint will redeem unmixed one-cent coins
inscribed with a year after 1982 at a rate of $1.8100 per pound.
(ii) The United States Mint will redeem $1 coins inscribed with a
year after 1978 at the rate set forth at paragraph (d)(1)(iv) of this
section unless such $1 coins are presented unmixed from $1 coins
inscribed with a year before 1979. The United States Mint will redeem
unmixed $1 coins inscribed with a year after 1978 at a rate of $56.00
per pound.
(e) Redemption sites. Coins are shipped at the sender's risk of
loss and expense.
(1) Bent and partial coins submitted in quantities less than or
equal to a threshold established annually by the United States Mint
will be redeemed only at the United States Mint at Philadelphia, P.O.
Box 400, Philadelphia, PA 19105.
(2) Bent and partial coins submitted in quantities greater than a
threshold established annually should be scheduled with the United
States Mint, and the participant may be required to send the shipment
directly to the authorized recycler(s) of the United States Mint.
Sec. 100.12 Exchange of fused or mixed coin.
(a) Definitions. (1) Fused coins are U.S. coins that are melted to
the extent that they are bonded together.
(2) Mixed coins are U.S. coins of several alloy categories that are
presented together, but are readily and clearly identifiable as U.S.
coins.
(b) Fused and mixed coins. The United States Mint will not accept
fused coins for redemption. The United States Mint will not accept
mixed coins for redemption, except as provided for in Sec.
100.11(d)(2).
Sec. 100.13 Notices.
(a) Additional information and procedures about the United States
Mint's redemption of bent or partial coins can be found on the United
States Mint's website.
(b) Criminal penalties connected with the defacement or mutilation
of U.S. coins are provided in 18 U.S.C. 331.
(c) Notwithstanding any other provision of this subpart, the
Director of the United States Mint may provide information pertaining
to any bent or partial coin submissions, or turn over the entire
submission, to law enforcement officials or other third parties for
purposes of investigating related criminal activity or for purposes of
seeking a civil judgment.
(d) Whoever intentionally files a false claim seeking reimbursement
for uncurrent, bent, or partial coins may be held criminally liable
under a number of statutes including 18 U.S.C. 287 and 18 U.S.C. 1341
and may be held civilly liable under 31 U.S.C. 3729, et seq.
John F. Schorn,
Chief Counsel, United States Mint.
[FR Doc. 2021-09338 Filed 5-4-21; 8:45 am]
BILLING CODE 4810-37-P
