Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80335 

payments by check through February 

28, 2013; 

(iii) Was born prior to May 1, 1921, 

and is receiving payment by check on 

March 1, 2013; 

(iv) Receives a type of payment that 

is not eligible for deposit to a Direct 

Express® card account. In such cases, 

those payments are not required to be 

made by electronic funds transfer, 

unless and until such payments become 

eligible for deposit to a Direct Express®

card account; 

(v) Is ineligible for a Direct Express®

card because of suspension or 

cancellation of the individual’s card by 

the Financial Agent; 

(vi) Has filed a waiver request with 

Treasury certifying that payment by 

electronic funds transfer would impose 

a hardship because of the individual’s 

inability to manage an account at a 

financial institution or a Direct Express®

card account due to a mental 

impairment, and Treasury has not 

rejected the request; or 

(vii) Has filed a waiver request with 

Treasury certifying that payment by 

electronic funds transfer would impose 

a hardship because of the individual’s 

inability to manage an account at a 

financial institution or a Direct Express®

card account due to the individual 

living in a remote geographic location 

lacking the infrastructure to support 

electronic financial transactions, and 

Treasury has not rejected the request. 

* * * * * 

(6) Where the agency does not expect 

to make payments to the same recipient 

within a one-year period on a regular, 

recurring basis and remittance data 

explaining the purpose of the payment 

is not readily available from the 

recipient’s financial institution 

receiving the payment by electronic 

funds transfer; and 

* * * * * 

(b) An individual who requests a 

waiver under paragraphs (a)(1)(vi) and 

(vii) of this section shall provide, in 

writing, to Treasury a certification 

supporting that request, in such form 

that Treasury may prescribe. The 

individual shall attest to the 

certification before a notary public, or 

otherwise file the certification in such 

form that Treasury may prescribe. 

■ 4. Revise § 208.6 to read as follows: 

§ 208.6 Availability of the Direct Express®

Card. 

An individual who receives a Federal 

benefit, wage, salary, or retirement 

payment shall be eligible to open a 

Direct Express® card account. The 

offering of a Direct Express® card 

account shall constitute the provision of 

EBT services within the meaning of 

Public Law 104–208. 

■ 5. Revise § 208.7 to read as follows: 

§ 208.7 Agency responsibilities. 

An agency shall put into place 

procedures that allow recipients to 

provide the information necessary for 

the delivery of payments to the recipient 

by electronic funds transfer to an 

account at the recipient’s financial 

institution or a Direct Express® card 

account. 

■ 6. Revise § 208.8 to read as follows: 

§ 208.8 Recipient responsibilities. 

Each recipient who is required to 

receive payment by electronic funds 

transfer shall provide the information 

necessary to effect payment by 

electronic funds transfer. 

■ 7. Revise the third sentence in 

§ 208.11 to read as follows: 

§ 208.11 Accounts for disaster victims. 

* * * Treasury may deliver payments 

to these accounts notwithstanding any 

other payment instructions from the 

recipient and without regard to the 

requirements of §§ 208.4 and 208.7 of 

this part and § 210.5 of this chapter. 

* * * 

■ 8. Remove Appendix A and Appendix 

B to Part 208. 

Dated: December 16, 2010. 

Richard L. Gregg, 

Fiscal Assistant Secretary. 

[FR Doc. 2010–32117 Filed 12–21–10; 8:45 am] 

BILLING CODE 4810–35–P 

DEPARTMENT OF THE TREASURY 

Fiscal Service 

31 CFR Part 210 

RIN 1510–AB24 

Federal Government Participation in 

the Automated Clearing House 

AGENCY: Financial Management Service, 

Fiscal Service, Treasury. 

ACTION: Interim final rule. 

SUMMARY: The Department of the 

Treasury, Financial Management 

Service (FMS) is amending its 

regulation governing the use of the 

Automated Clearing House (ACH) 

system by Federal agencies to permit the 

delivery of Federal payments to prepaid 

debit cards that meet certain criteria. To 

be eligible to receive Federal payments, 

a card must provide the cardholder with 

pass-through deposit or share insurance 

and the card account must not have an 

attached line of credit or loan feature 

that triggers automatic repayment from 

the card account. In addition, the issuer 

of the card account must provide the 

cardholder with all of the consumer 

protections that apply to a payroll card 

under the Federal Reserve Board’s 

Regulation E. 

DATES: This interim final rule is 

effective January 21, 2011. Comments 

must be received on or before February 

22, 2011. 

ADDRESSES: You can download this 

interim final rule at the following Web 

site: http://www.fms.treas.gov/ach. You 

may also inspect and copy this interim 

final rule at: Treasury Department 

Library, Freedom of Information Act 

(FOIA) Collection, Room 1428, Main 

Treasury Building, 1500 Pennsylvania 

Avenue, NW., Washington, DC 20220. 

Before visiting, you must call (202) 622– 

0990 for an appointment. 

In accordance with the U.S. 

government’s eRulemaking Initiative, 

FMS publishes rulemaking information 

on http://www.regulations.gov. 

Regulations.gov offers the public the 

ability to comment on, search, and view 

publicly available rulemaking materials, 

including comments received on rules. 

Comments on this rule, identified by 

docket FISCAL–FMS–2010–0003, 

should only be submitted using the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions on the Web site for 

submitting comments. 

• Mail: Walt Henderson, Financial 

Management Service, 401 14th Street, 

SW., Room 337, Washington, DC 20227. 

The fax and e-mail methods of 

submitting comments on rules to FMS 

have been decommissioned. 

Instructions: All submissions received 

must include the agency name 

(‘‘Financial Management Service’’) and 

docket number FISCAL–FMS–2010– 

0003 for this rulemaking. In general, 

comments received will be published on 

Regulations.gov without change, 

including any business or personal 

information provided. Comments 

received, including attachments and 

other supporting materials, are part of 

the public record and subject to public 

disclosure. Do not disclose any 

information in your comment or 

supporting materials that you consider 

confidential or inappropriate for public 

disclosure. 

FOR FURTHER INFORMATION CONTACT: Walt 

Henderson, Director of the EFT Strategy 

Division, at (202) 874–6619 or 

walt.henderson@fms.treas.gov; or 

Natalie H. Diana, Senior Counsel, at 

(202) 874–6680 or 

natalie.diana@fms.treas.gov. 


emcdonald on DSK2BSOYB1PROD with RULES
80336 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

1See 15 U.S.C. 1693b(a). This authority will be 

transferred to the Bureau of Consumer Financial 

Protection (CFPB) pursuant to Public Law 111–203, 

§ 1084. 

SUPPLEMENTARY INFORMATION: On May 

14, 2010, we published in the Federal 

Register, at 75 FR 27239, a Notice of 

Proposed Rulemaking (NPRM) 

requesting comment on a number of 

proposed amendments to 31 CFR part 

210 (part 210). One of the proposed 

amendments was to allow Federal 

payments to be delivered to prepaid 

debit card or similar card accounts 

meeting certain consumer protection 

requirements. The NPRM also proposed 

to allow Federal payments to be 

delivered to certain kinds of accounts 

established by nursing facilities or 

religious orders. In addition, the NPRM 

addressed a number of other issues, 

including requirements adopted by 

NACHA—The Electronic Payments 

Association in 2009 to identify 

international payment transactions 

using a new Standard Entry Class and 

proposed changes to the process for 

reclaiming post-death benefit payments 

from financial institutions. 

In this Interim Final Rule, we are 

finalizing the proposal in the NPRM to 

allow Federal payments to be delivered 

to prepaid card accounts meeting 

certain consumer protection 

requirements, with a number of changes 

reflecting the comments that we 

received. Although we previously 

requested and received comment on the 

prepaid card proposal, we are issuing 

this rule as an interim final rule in order 

to provide the public with an additional 

opportunity to comment. This interim 

final rule does not address any of the 

other proposed amendments to part 210 

that were published in the NPRM. The 

final rule relating to those proposed 

amendments will be issued separately. 

I. Background and Summary of Prepaid 

Card Proposal 

Title 31 CFR 210.5(a) generally 

requires that a Federal direct deposit 

payment be delivered to a deposit 

account at a financial institution. For all 

payments other than vendor payments, 

the account at the financial institution 

must be in the name of the recipient, 

unless one of the exceptions listed in 

the regulation applies. As explained in 

the NPRM, our long-standing 

interpretation of the words ‘‘in the name 

of the recipient’’ has been that the 

payment recipient’s name must appear 

in the account title. See, e.g., 64 FR 

17480, referring to discussion at 63 FR 

51490, 51499. The purpose of this 

requirement is to ensure that the 

payment reaches the intended recipient 

through delivery to a deposit account 

that the recipient owns and to which he 

or she has unfettered access, so that the 

payment is not diverted to a creditor or 

another third party before it reaches the 

recipient and comes under the 

recipient’s control. 

The ‘‘in the name of the recipient’’ 

requirement has the effect of prohibiting 

payments to pooled accounts in which 

the recipient’s ownership interest is 

reflected in subacccount records. 

Because prepaid card programs are 

generally set up using this kind of 

structure, the delivery of non-vendor 

Federal payments to these types of cards 

currently is prohibited. We indicated in 

the NPRM that we believed that the ‘‘in 

the name of the recipient’’ requirement 

may be impeding the use of prepaid 

card programs that may be beneficial to 

the unbanked and underbanked 

populations. We therefore requested 

comment on a proposal to create an 

exception to the ‘‘in the name of the 

recipient’’ requirement in order to allow 

the delivery of Federal payments to 

accounts accessed by prepaid and stored 

value cards, provided that the card bears 

the cardholder’s name and meets the 

following requirements: 

• The account accessed by the card is 

held at an insured depository institution 

and meets the requirements for passthrough insurance under 12 CFR part 

330 such that the cardholder’s balance 

is FDIC insured to the extent permitted 

by law; and 

• The card account constitutes an 

‘‘account’’ as defined in 12 CFR 205.2(b) 

such that the consumer protections of 

Regulation E (12 CFR part 205), the rule 

prescribed by the Board of Governors of 

the Federal Reserve System (Board) to 

implement the Electronic Fund Transfer 

Act, apply to the cardholder. 

We requested comment on the 

implications of allowing delivery of 

Federal benefit and other non-vendor 

payments to accounts that meet the 

requirements listed above. We further 

noted that we are mindful of concerns 

that account arrangements may be 

structured to facilitate automatic third 

party debits to a direct deposit account 

(known in some States as payday 

lending) and similar arrangements that 

are inappropriate for Federal benefit 

recipients, and we particularly solicited 

comment on whether the consumer 

protections required in the proposed 

exception are adequate to prevent 

potential abuses. 

II. Summary of Comments 

We received 12 comments in response 

to the NPRM. The commenters 

represented a variety of perspectives. 

Comments were submitted by financial 

institutions, consumer advocacy groups, 

industry associations, the Senate 

Committee on Finance and the House 

Committee on Ways and Means. Most 

commenters commented on our 

proposal to allow Federal payments to 

be deposited to prepaid card accounts. 

Several commenters, including 

financial institutions and a nonprofit 

organization focusing on financial 

services for underserved consumers, 

supported the proposed prepaid card 

exception to the ‘‘in the name of the 

recipient’’ requirement. Those 

supporting the exception noted that 

prepaid products can benefit Federal 

payment recipients by expanding their 

options to receive Federal payments. 

They pointed out that underbanked 

Federal benefit recipients currently may 

use a variety of high cost financial 

service providers to cash their benefit 

checks and pay their bills. These 

commenters also noted that 

underbanked individuals may tend to 

hold significant amounts of cash, which 

may pose a security risk. According to 

these commenters, expanding Federal 

benefit recipients’ ability to use prepaid 

cards could alleviate many of these 

concerns. 

Most commenters supported our 

proposed requirement that the prepaid 

cardholder’s balance be FDIC-insured 

via the FDIC’s requirements for passthrough insurance. Comments regarding 

the proposed requirement that card 

accounts constitute ‘‘accounts’’ subject 

to Regulation E were mixed. Several 

commenters urged us to clarify the 

proposed requirement that the 

consumer protections of Regulation E 

apply to the cardholder. Some 

commenters noted that currently the 

only type of prepaid cards to which 

Regulation E applies are payroll cards. 

Since Regulation E does not currently 

apply to general use prepaid cards, 

some commenters were uncertain as to 

whether only payroll cards would be 

eligible for the proposed exception. 

Therefore, commenters requested that 

the final rule clarify whether a prepaid 

card that would fit within the exception 

proposed by Treasury must: (a) Actually 

be subject to Regulation E (which, under 

current law, would eliminate many or 

all general use prepaid products from 

eligibility under the proposed 

exception); or (b) provide protections 

similar or identical to those contained 

in Regulation E. 

Other commenters suggested that 

Regulation E should be extended to 

cover all prepaid cards. We note that 

FMS does not have the authority to 

amend Regulation E to cover prepaid 

cards. That authority is assigned to the 

Board.1 One commenter, referring to 


emcdonald on DSK2BSOYB1PROD with RULES
Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80337 

2The Direct Express® prepaid card is a card 

established pursuant to terms and conditions 

approved by FMS. Direct Express® is a registered 

service mark of the Financial Management Service, 

U.S. Department of the Treasury. The Direct 

Express® Debit MasterCard® card is issued by 

Comerica Bank, pursuant to a license by MasterCard 

International Incorporated. MasterCard® and the 

MasterCard® Brand Mark are registered trademarks 

of MasterCard International Incorporated. See, 75 

FR 34394, 34397–34398 (Jun. 17, 2010) for a 

description of the Direct Express® card. 

Regulation E, recommended that 

‘‘Treasury ensure that these protections 

are in place prior to allowing benefits to 

be deposited onto any cards.’’ It is 

unclear whether the commenter 

intended to suggest that we delay 

finalizing the prepaid card proposal 

until the Board amends Regulation E to 

address general use prepaid cards. 

Some financial institutions 

commented that requiring issuers to 

voluntarily provide cardholders with 

the protections of Regulation E would 

increase costs to cardholders and 

adversely impact innovation in the 

prepaid card industry. Several financial 

institutions suggested that FMS should 

require compliance with only some of 

Regulation E’s protections, such as those 

providing protections for unauthorized 

transactions and those governing error 

resolution processes. These commenters 

recommended that certain Regulation E 

requirements, such as the periodic 

statement requirement, not be imposed. 

In contrast, some other commenters 

expressed the view that FDIC insurance 

and Regulation E protections are not 

sufficient to adequately protect 

cardholders. These commenters 

expressed concern that Federal benefits 

might be deposited onto prepaid and 

stored value products that carry high 

fees or other features, such as lines of 

credit, that may affect the amount of the 

Federal benefit ultimately available to 

the Federal benefit recipient. One 

consumer advocacy organization 

requested that FMS impose a number of 

additional requirements on prepaid 

cards in order for them to be eligible for 

the exception to the ‘‘in the name of the 

recipient’’ rule. Additional requirements 

that commenters proposed include: 

Prohibiting the deposit of Federal 

benefits onto prepaid cards or stored 

value cards that contain credit features; 

regulating the fees associated with a 

prepaid card or stored value card; 

imposing fee disclosure requirements; 

requiring prepaid card providers to 

inform benefit recipients of the Direct 

Express® prepaid card 2 or of any other 

lower-cost options; and ensuring that 

card providers cannot collect fees or 

repayment of any advances by 

exercising any right of set-off against 

Federal benefit payments. 

On the other hand, another consumer 

advocacy organization supported the 

prepaid card proposal without any 

changes, except that they urged us to 

craft language that ensures that 

cardholders’ access to responsiblydesigned credit is not restricted. This 

organization recognized the concern 

that the accounts may be structured to 

facilitate payday lending or other 

similar arrangements that can result in 

unaffordable debt levels for Federal 

beneficiaries. However, they expressed 

concern that a vaguely worded 

restriction on credit features associated 

with card accounts could prevent 

Federal benefit recipients from 

accessing forms of credit that are 

responsibly structured. 

Finally, some commenters expressed 

concern that we have not pursued 

enforcement action against entities that 

may be currently violating the ‘‘in the 

name of the recipient’’ requirements by 

allowing payments onto prepaid cards 

or other accounts. One commenter 

urged that, in order to allow for 

enforcement, the rule expressly provide 

that no institution (bank or nonbank) 

may accept direct deposit of Federal 

payments to accounts that do not meet 

the rule’s requirements. 

III. Interim Final Rule 

We are revising the proposed prepaid 

card exception to address the comments 

we received. We are requiring that the 

funds accessible through the card be 

insured for the benefit of the cardholder 

in light of the fact that commenters 

uniformly supported such an insurance 

requirement, but we are broadening that 

provision to allow for eligibility of 

insurance by National Credit Union 

Share Insurance Fund (NCUSIF). We are 

aware that NCUSIF pass-through 

insurance is available to beneficial 

owners of share accounts in certain 

circumstances, and we request comment 

on whether credit unions have 

established, or might establish in the 

future, prepaid card accounts that 

provide pass-through insurance for 

members or non-members. 

Because Regulation E currently does 

not cover any prepaid cards other than 

payroll cards, we are making the 

prepaid card exception available for 

prepaid cards if the issuer voluntarily 

provides all of the protections that 

apply to payroll cards under Regulation 

E, as may be amended from time to 

time. In addition, we are adding a 

requirement that the prepaid card not 

have an attached line of credit or loan 

feature that triggers automatic 

repayment from the card account. While 

we are not determining a fee structure 

or a range of acceptable fees, it is our 

expectation that the fees for such cards 

be transparent to the recipient, 

adequately disclosed, and reasonable by 

industry standards. We note in this 

regard that Regulation E requires that 

fees be disclosed in a clear and readily 

understandable manner. 

In developing the interim final rule, 

we have attempted to balance the need 

to maintain appropriate consumer 

protections—consistent with the general 

requirement of section 210.5(a)—with 

concerns expressed by different 

commenters. As originally proposed, the 

exception would not have allowed the 

delivery of Federal payments to any 

general use prepaid card accounts, 

because prepaid card accounts (other 

than payroll card accounts) are not 

subject to Regulation E. Moreover, 

several commenters indicated that the 

industry is unlikely to develop prepaid 

cards that provide cardholders with all 

of the protections applicable to bank 

deposit accounts. Finalizing the 

requirement that eligible cards be 

covered by all of the protections that 

apply to an account under Regulation E 

would therefore have rendered the 

exception pointless. Instead, we are 

requiring that the protections that apply 

to payroll card accounts under 

Regulation E be provided by the card 

issuer. For cards that do not constitute 

payroll cards as defined in Regulation E, 

this means that the issuer must 

voluntarily provide the protections that 

apply to payroll cards. This requirement 

ensures that cardholders will receive 

important consumer protections, while 

allowing prepaid card issuers to provide 

account history and balance information 

in lieu of sending periodic statements. 

Several commenters pointed 

specifically to Regulation E’s statement 

requirements as a barrier to the 

provision of prepaid cards at a 

reasonable cost. Regulation E provides 

an alternative means of compliance for 

the statement requirements for payroll 

cards. Generally, statements need not be 

sent if the issuer makes the consumer’s 

account balance available by phone and 

also makes available an electronic 

history of the consumer’s account 

transaction activity covering 60 days, as 

well as a written transaction history 

covering 60 days upon the consumer’s 

request. See 12 CFR 205.18(b). 

Consequently, the unauthorized 

transaction and error resolution 

reporting deadlines for payroll cards are 

triggered by the earlier of the sending of 

a written history reflecting the 

transaction to the cardholder or the date 

the cardholder accesses the electronic 


emcdonald on DSK2BSOYB1PROD with RULES
80338 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

3 75 FR 57,252 (Sept. 20, 2010). 

4See Public Law 111–203, § 1075 (amending the 

EFTA to allow the Board to prescribe rules relating 

to interchange transaction fees for electronic debit 

transactions). 

account history reflecting the 

transaction. See 12 CFR 205.18(c)(3), (4). 

We considered developing a separate 

framework of requirements based on 

Regulation E to apply to prepaid cards 

to which Federal payments are directly 

deposited, but believe it would be 

detrimental to introduce a separate and 

unique framework of consumer 

protections for a relatively limited class 

of transactions involving prepaid cards. 

The payroll card requirements of 

Regulation E are well established and 

Treasury believes that, in general, the 

card industry already is familiar with 

appropriate measures necessary to meet 

those requirements. In this regard, 

Treasury believes that a number of 

prepaid cards already provide most, 

though not necessarily all, of the payroll 

card protections to cardholders. It is our 

expectation that some issuers of existing 

prepaid cards will choose to modify the 

terms and conditions of the card 

accounts to include all of the payroll 

card protections to cardholders, so that 

their cards will be eligible to receive 

Federal payments. We also anticipate 

that as new prepaid card programs are 

developed, issuers seeking to make the 

cards available to Federal payment 

recipients will structure their cards to 

incorporate Regulation E’s payroll card 

protections. We request comment on the 

extent to which prepaid card issuers 

will choose to do so. We also request 

comment on the kinds of changes that 

card issuers will undertake to provide 

the consumer protection specified in 

this interim final rule and the costs 

associated with adopting these changes. 

We have also attempted to balance the 

competing comments made by 

consumer organizations relating to 

credit features associated with prepaid 

cards. In order to prevent Federal 

payments from being delivered to 

prepaid cards that have payday lending 

or ‘‘account advance’’ features, we are 

prohibiting prepaid cards from having 

an attached line of credit if the credit 

agreement allows for automatic 

repayment of a loan from a card account 

triggered by the delivery of the Federal 

payment into the account. Our intention 

is that this restriction will prevent 

arrangements in which a bank or 

creditor ‘‘advances’’ funds to a 

cardholder’s account, and then repays 

itself for the advance and any related 

fees by taking some or all of the 

cardholder’s next deposit. Accounts 

covered by Regulation E, including 

payroll cards, are subject to restrictions 

on these types of arrangements through 

Regulation E’s ‘‘compulsory use’’ 

provision, which provides: ‘‘No 

financial institution or other person may 

condition an extension of credit to a 

consumer on the consumer’s repayment 

by preauthorized electronic fund 

transfers, except for credit extended 

under an overdraft credit plan or 

specified to maintain a specified 

minimum balance in the consumer’s 

account.’’ 12 CFR 205.10(e). Because 

prepaid cards other than payroll cards 

are not currently covered by this 

provision, we are restricting credit 

features associated with cards as a 

condition for the receipt of Federal 

payments onto a card. 

This restriction does not, however, 

bar the provision of credit to consumers 

who receive Federal payments via an 

eligible prepaid card product. Nor does 

this restriction absolutely bar a 

recipient-cardholder from repaying a 

loan with an eligible prepaid card 

product to which Federal payments 

have been made. We request comment 

on whether we have struck the 

appropriate balance, and on whether the 

wording of the prohibition is 

sufficiently clear. 

To address comments made 

concerning the need to enforce the ‘‘in 

the name of the recipient’’ requirement, 

we have added a provision to the 

exception to make it clear that no 

person or entity may issue a prepaid 

card that accepts Federal payments in 

violation of the rule’s requirements, and 

that any financial institution that holds 

an account for or on behalf of a prepaid 

card issuer to which Federal payments 

are received is responsible for ensuring 

that the requirements of the exception 

are met. Treasury believes that, under 

this provision, a violation of a 

requirement of the exception currently 

would be enforceable by the appropriate 

Federal or State regulator (or both) to 

the extent that the regulator has 

jurisdiction over the person or entity, 

and in accordance with applicable law. 

If we become aware that Federal 

payments are being deposited to prepaid 

cards that do not meet these 

requirements, we will review the 

situation and take appropriate action. 

We may, for example, contact both the 

issuer and the financial institution 

holding the issuer’s account, review the 

terms and conditions of the card 

account, and refer any violations of our 

requirements to the appropriate 

regulatory bodies, including the primary 

regulator of the financial institution 

maintaining the card account for an 

issuer. Treasury requests comment on 

whether the wording of this provision is 

sufficiently clear. 

Treasury also seeks comment on 

whether the consumer protections 

provided by this interim final rule allow 

for more novel uses of these cards by 

consumers including, but not limited to, 

those (1) who currently own bank 

accounts but prefer receiving payments 

by check due to privacy reasons; and (2) 

consumers who are unbanked or 

underbanked who receive Federal 

payments by check. 

IV. Section-by-Section Analysis 

Section 210.5(b)(5)(i) permits a 

Federal payment to be deposited to an 

account accessed by a prepaid card that 

does not meet the ‘‘in the name of the 

recipient’’ requirement if certain 

conditions are met. To be eligible to 

receive Federal payments, a prepaid 

card must meet four conditions. The 

first condition, at § 210.5(b)(5)(i)(A), is 

that the account be held at an insured 

financial institution. The second 

condition, at § 210.5(b)(5)(i)(B), requires 

that the account be set up to meet the 

requirements for pass through deposit or 

share insurance under 12 CFR part 330 

or 12 CFR part 745 such that the funds 

accessible through the card are insured 

for the benefit of the Federal payment 

recipient. The third condition, at 

§ 210.5(b)(5)(i)(C), is that the account is 

not attached to a line of credit or loan 

agreement under which repayment from 

the card account is triggered by delivery 

of the Federal payment. The fourth 

condition, at § 210.5(b)(5)(i)(D), requires 

the issuer of the card to comply with all 

of the requirements, and to provide the 

Federal payment recipient with the 

same consumer protections, that apply 

to a payroll card under regulations 

implementing the Electronic Fund 

Transfer Act (EFTA), 15 U.S.C. 1693a(1). 

The payroll card provisions of those 

regulations currently are located at 12 

CFR 205.18 and are administered by the 

Board of Governors of the Federal 

Reserve System. This authority is 

scheduled to be transferred to the CFPB 

on the ‘‘designated transfer date,’’ which 

is set as July 21, 2011.3

With respect to the fourth condition, 

§ 210.5(b)(5)(i)(D) provides that the 

issuer must comply with the rules 

implementing the EFTA ‘‘as amended.’’ 

Treasury notes that, as of the designated 

transfer date, the CFPB will be 

authorized to prescribe rules, as well as 

issue interpretations and guidance, 

implementing the provisions of the 

EFTA (other than section 920 of the 

EFTA).4 In addition, the requirements 

under the EFTA are enforceable by the 

Federal banking agencies, the Federal 

Trade Commission, and other Federal 

agencies, including the CFPB, subject to 

several provisions of the Consumer 


emcdonald on DSK2BSOYB1PROD with RULES
Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 80339 

5See, e.g., Public Law 111–203, §§ 1025–1026 

(governing the enforcement authorities of the CFPB 

and a prudential regulator with respect to a 

depository institution and, depending on the size of 

that institution, its affiliates). 

Financial Protection Act of 2010.5

Treasury expects that, as the 

requirements under the EFTA that apply 

to a payroll card account may be 

amended or interpreted from time to 

time, the CFPB and the agencies charged 

with enforcing the EFTA—not 

Treasury—also will be in the position to 

administer the requirements under this 

§ 210.5(b)(5)(i)(D). 

Section 210.5(b)(5)(ii) prohibits a 

person or entity from issuing a card that 

receives Federal payments in violation 

of these requirements. Moreover, any 

financial institution violates this 

regulation if the institution maintains an 

account for or on behalf of an issuer of 

a prepaid card that receives Federal 

payments if that issuer violates this 

subsection. As discussed above, we will 

refer violations of the regulation to the 

appropriate regulatory bodies. 

Section 210.5(b)(5)(iii) provides that 

the term ‘‘payroll card account’’ has the 

same meaning as that term is defined for 

purposes of the rules implementing the 

EFTA. The term ‘‘prepaid card’’ means a 

card, code, or other means of access to 

funds of a recipient. The term ‘‘issuer’’ 

means a person or entity that issues a 

prepaid card. 

V. Procedural Requirements 

Request for Comment on Plain Language 

Executive Order 12866 requires each 

agency in the Executive branch to write 

regulations that are simple and easy to 

understand. We invite comment on how 

to make the interim final rule clearer. 

For example, you may wish to discuss: 

(1) Whether we have organized the 

material to suit your needs; (2) whether 

the requirements of the rule are clear; or 

(3) whether there is something else we 

could do to make this rule easier to 

understand. 

Regulatory Planning and Review 

The Office of Management and Budget 

(OMB)’s Office of Information and 

Regulatory Affairs (OIRA) designates the 

interim final rule as a ‘‘significant 

regulatory action’’ as defined in 

Executive Order 12866. While Treasury 

has not conducted a regulatory impact 

analysis that comports with the 

requirements of OMB Circular A–4, 

Treasury is providing some preliminary 

information about the current industry 

practices, and potential costs and 

benefits of this rule. Treasury believes 

that many issuers of the prepaid cards 

are already providing some consumer 

protection. We seek comment on the 

degree to which consumer protection is 

already provided by prepaid debit card 

issuers; the changes the issuers would 

undertake to provide the level of 

consumer protection specified in this 

rulemaking; and the costs associated 

with providing these additional 

protections. 

In addition, Treasury believes that 

once prepaid cards provide the 

specified consumer protections, these 

cards will be used in novel ways. An 

example of this is receiving tax refunds 

on these prepaid cards. Given that there 

were approximately 45 million tax 

refund checks issued in FY 2010, 

assuming $1 per check processing fee on 

the part of the Federal government, and 

assuming that all Federal tax refunds are 

processed through prepaid cards, the 

reduction in costs to the Federal 

government for processing these checks 

could be approximately $45 million. 

Therefore, Treasury seeks information 

from the public regarding other ways in 

which these prepaid cards will be used 

to receive Federal payments across 

different types of consumers. 

Depending upon the comments 

received on the interim final rule, 

Treasury may produce a Regulatory 

Impact Analysis that comports with the 

requirements of Circular A–4 in its final 

rule. 

Regulatory Flexibility Act Analysis 

Because no notice of proposed 

rulemaking is required, the provisions 

of the Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.) do not apply. Even 

if the RFA did apply, we have 

considered the potential impact of this 

rule on small entities and hereby certify 

that the interim final rule will not have 

a significant economic impact on a 

substantial number of small entities. We 

believe the rule will affect only a 

limited number of small entities and 

that any economic impact will be 

minimal. Currently, Federal non-vendor 

payments are not permitted to be 

delivered to general use prepaid cards. 

The interim final rule will allow 

prepaid card issuers to develop and 

offer to Federal benefit recipients 

prepaid cards that meet the rule’s 

requirements. Some prepaid card 

issuers, regardless of size, may choose to 

meet the rule’s requirements, in which 

case they may be able to expand their 

customer base to include Federal benefit 

recipients. Any economic impact for 

these issuers is not expected to be 

significant. Accordingly, a regulatory 

flexibility analysis under the RFA is not 

required. We invite comments regarding 

any less burdensome alternatives to this 

rule. 

Unfunded Mandates Act of 1995 

Section 202 of the Unfunded 

Mandates Reform Act of 1995, 2 U.S.C. 

1532 (Unfunded Mandates Act), 

requires that the agency prepare a 

budgetary impact statement before 

promulgating any rule likely to result in 

a Federal mandate that may result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year. If a budgetary impact 

statement is required, section 205 of the 

Unfunded Mandates Act also requires 

the agency to identify and consider a 

reasonable number of regulatory 

alternatives before promulgating the 

rule. We have determined that the 

interim final rule will not result in 

expenditures by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year. Accordingly, we have 

not prepared a budgetary impact 

statement or specifically addressed any 

regulatory alternatives. 

Authority To Issue Interim Final Rule 

The Administrative Procedure Act (5 

U.S.C. 551 et seq.) (APA) generally 

requires public notice before 

promulgation of regulations or a 

showing of good cause that prior notice 

and opportunity to comment are 

unnecessary, impracticable, or contrary 

to the public interest. See 5 U.S.C. 

553(b). In accordance with section 

553(b), FMS published a notice of 

proposed rulemaking requesting 

comment on the prepaid card exception 

on May 14, 2010 (75 FR 27239) and 

FMS has considered the comments 

received in developing this interim final 

rule. FMS is issuing this rule for effect, 

but also wishes to provide the public 

another opportunity to comment on it. 

List of Subjects in 31 CFR Part 210 

Automated clearing house, Electronic 

funds transfer, Financial institutions, 

Fraud. 

■ For the reasons set forth in the 

preamble, 31 CFR part 210 is amended 

as follows: 

PART 210—FEDERAL GOVERNMENT 

PARTICIPATION IN THE AUTOMATED 

CLEARING HOUSE 

■ 1. The authority citation for part 210 

continues to read as follows: 

Authority: 5 U.S.C. 5525; 12 U.S.C. 391; 31 

U.S.C. 321, 3301, 3302, 3321, 3332, 3335, and 

3720. 

■ 2. In § 210.5, redesignate paragraph 

(b)(5) as (b)(6) and add a new paragraph 

(b)(5) to read as follows: 


emcdonald on DSK2BSOYB1PROD with RULES
80340 Federal Register / Vol. 75, No. 245 / Wednesday, December 22, 2010 / Rules and Regulations 

§ 210.5 Account requirements for Federal 

payments. 

* * * * * 

(b) * * * 

(5)(i) Where a Federal payment is to 

be deposited to an account accessed by 

the recipient through a prepaid card that 

meets the following requirements: 

(A) The account is held at an insured 

financial institution; 

(B) The account is set up to meet the 

requirements for pass-through deposit 

or share insurance such that the funds 

accessible through the card are insured 

for the benefit of the recipient by the 

Federal Deposit Insurance Corporation 

or the National Credit Union Share 

Insurance Fund in accordance with 

applicable law (12 CFR part 330 or 12 

CFR part 745); 

(C) The account is not attached to a 

line of credit or loan agreement under 

which repayment from the account is 

triggered upon delivery of the Federal 

payments; and 

(D) The issuer of the card complies 

with all of the requirements, and 

provides the holder of the card with all 

of the consumer protections, that apply 

to a payroll card account under the rules 

implementing the Electronic Fund 

Transfer Act, as amended. 

(ii) No person or entity may issue a 

prepaid card that receives Federal 

payments in violation of this subsection, 

and no financial institution may 

maintain an account for or on behalf of 

an issuer of a prepaid card that receives 

Federal payments if the issuer violates 

this paragraph. 

(iii) For the purposes of this 

paragraph (b)(5), the term— 

(A) ‘‘Payroll card account’’ shall have 

the same meaning as that term is 

defined in the rules implementing the 

Electronic Fund Transfer Act; 

(B) ‘‘Prepaid card’’ means a card, code, 

or other means of access to funds of a 

recipient; and 

(C) ‘‘Issuer’’ means a person or entity 

that issues a prepaid card. 

* * * * * 

Dated: December 16, 2010. 

Richard L. Gregg, 

Fiscal Assistant Secretary. 

[FR Doc. 2010–32114 Filed 12–21–10; 8:45 am] 

BILLING CODE 4810–35–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R02–OAR–2010–0310, FRL–9214–4] 

Approval and Promulgation of 

Implementation Plans; New Jersey; 

8-Hour Ozone Control Measures 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is approving a request by 

New Jersey to revise the State 

Implementation Plan (SIP) for ozone 

involving the control of volatile organic 

compounds (VOCs). The SIP revision 

consists of two new rules, Subchapter 

26, ‘‘Prevention of Air Pollution From 

Adhesives, Sealants, Adhesive Primers 

and Sealant Primers,’’ and Subchapter 

34, ‘‘TBAC Emissions Reporting,’’ (TBAC 

means tertiary butyl acetate or 

t-butyl acetate) and revisions to 

Subchapter 23, ‘‘Prevention of Air 

Pollution From Architectural Coatings,’’ 

Subchapter 24, ‘‘Prevention of Air 

Pollution From Consumer Products,’’ 

and Subchapter 25, ‘‘Control and 

Prohibition of Air Pollution by 

Vehicular Fuels,’’ of the New Jersey 

Administrative Code. The intended 

effect of this action is to approve control 

strategies that will result in VOC 

emission reductions that will help 

achieve attainment of the national 

ambient air quality standard for ozone. 

DATES: Effective Date: This rule is 

effective on January 21, 2011. 

ADDRESSES: EPA has established a 

docket for this action under Docket ID 

No. EPA–R02–OAR–2010–0310. All 

documents in the docket are listed on 

the http://www.regulations.gov Web 

site. Although listed in the index, some 

information is not publicly available, 

e.g., CBI or other information whose 

disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, is not placed on 

the Internet and will be publicly 

available only in hard copy form. 

Publicly available docket materials are 

available either electronically through 

http://www.regulations.gov or in hard 

copy at the Environmental Protection 

Agency, Region II Office, Air Programs 

Branch, 290 Broadway, 25th Floor, New 

York, New York 10007–1866. This 

Docket Facility is open from 8:30 a.m. 

to 4:30 p.m., Monday through Friday, 

excluding legal holidays. The Docket 

telephone number is 212–637–4249. 

FOR FURTHER INFORMATION CONTACT: Paul 

Truchan, Air Programs Branch, 

Environmental Protection Agency, 290 

Broadway, 25th Floor, New York, New 

York 10007–1866, (212) 637–4249. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. What action is EPA taking? 

II. What comments did EPA receive in 

response to its proposal? 

III. What are EPA’s conclusions? 

IV. Statutory and Executive Order Reviews 

I. What action is EPA taking? 

On April 9, 2009, New Jersey 

submitted a proposed revision to the 

State Implementation Plan (SIP) that 

includes amendments to New Jersey 

Administrative Code, Title 7: Chapter 27 

(NJAC 7:27) 

—Subchapter 24, ‘‘Prevention of Air 

Pollution From Consumer Products,’’ 

—Subchapter 26, ‘‘Prevention of Air 

Pollution From Adhesives, Sealants, 

Adhesive Primers and Sealant 

Primers,’’ 

—Subchapter 34, ‘‘TBAC Emissions 

Reporting,’’ and 

—Amending the definition of volatile 

organic compound (VOC) throughout 

NJAC 7:27. 

The revisions to Subchapter 24 expand 

the number of consumer product 

categories that are regulated, and 

revised and improved the portable fuel 

container requirements. Subchapter 26 

is a new rule that regulates adhesives, 

sealants, adhesive primers and sealant 

primers that are sold in larger containers 

and used primarily in commercial/ 

industrial applications, but includes 

residential applications of these 

products, such as carpet and flooring 

installations and roofing installations. 

Subchapter 34 is a new rule that 

establishes reporting requirements for 

tertiary butyl acetate or t-butyl acetate 

(TBAC) emissions. The definition of 

VOC was revised throughout the New 

Jersey rules to exclude TBAC from VOC 

emissions limitations or VOC content 

requirements, but requires that TBAC be 

considered a VOC for purposes of 

recordkeeping, emissions reporting, 

photochemical dispersion modeling and 

inventory requirements. These rules 

complete the commitment New Jersey 

made as part of its RACT analysis and 

1997 8-hour national ambient air quality 

standard (NAAQS) ozone attainment 

demonstration that EPA conditionally 

approved. 

For additional information, see the 

proposed rulemaking published on July 

22, 2010 (75 FR 42672) or the Technical 

Support Document which is available 

on line at http://www.regulations.gov 

and entering the docket number EPA– 

R02–OAR–2010–0310. 


emcdonald on DSK2BSOYB1PROD with RULES