US Mint Proposes Rule for Coin Exchange

Content

ACTION:

Notice of proposed rulemaking.

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 rulemaking@usmint.treas.gov.

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,

  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 OIRA_Submission@omb.eop.gov, 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:

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

1. The authority for part 100 continues to read as follows:

Authority:

31 U.S.C. 321.

1. 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. § 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 § 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.

§ 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

  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.

§ 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 § 100.11(d)(2).

§ 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

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