48714 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules

1 As used herein, ‘‘financial institution’’ means

any institution included in the definition of

depository institution in 12 U.S.C. 461(b)(1)(A),

excluding subparagraphs (v) and (vii), and any

agency or branch of a foreign bank as defined in 12

U.S.C. 3101. See also the related section-by-section

discussion of this term defined in the proposed rule

at § 208.2(e).

DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 208

RIN 1510–AA56

Management of Federal Agency

Disbursements

AGENCY: Financial Management Service,

Fiscal Service, Treasury.

ACTION: Notice of proposed rulemaking;

notice of public hearings.

SUMMARY: Section 31001(x) of the Debt

Collection Improvement Act of 1996

(the ‘‘Act’’) amends 31 U.S.C. 3332 to

require Federal agencies (‘‘agencies’’) to

convert all Federal payments (other than

payments under the Internal Revenue

Code) from checks to electronic funds

transfer (‘‘EFT’’) in two phases. Phase

one began July 26, 1996. All recipients

who become eligible to receive Federal

payments on or after that date are

required to receive such payments by

EFT unless the recipient certifies in

writing that the recipient does not have

either an account with a financial

institution or an authorized payment

agent. The Department of the Treasury

(‘‘Treasury’’) issued an interim rule on

July 26, 1996, to implement these

requirements.

Phase two begins January 2, 1999. The

Act provides that, subject to the

authority of the Secretary of the

Treasury (the ‘‘Secretary’’) to grant

waivers, all Federal payments (other

than payments under the Internal

Revenue Code) made after January 1,

1999 must be made by EFT. This

proposed rule, to implement the

requirements that take effect after

January 1, 1999, is being published for

comment.

DATES: Written comments on the

proposed rule must be received no later

than December 16, 1997. Public

hearings on the proposed rule will be

held in Dallas on October 14, 1997, in

New York City on October 27, 1997, and

in Baltimore on October 30, 1997.

Requests to speak at one of the three

public hearings must be received 14

days before the date of that hearing. See

the Supplementary Information for

further details concerning the hearings.

ADDRESSES: Comments should be sent to

Cynthia L. Johnson, Director, Cash

Management Policy and Planning

Division, Financial Management

Service, U.S. Department of the

Treasury, Room 420, 401 14th Street

S.W., Washington, D.C. 20227. A copy

of the proposed rule is available on the

Financial Management Service’s EFT

web site at http://www.fms.treas.gov/

eft/. Public hearings will be held in

Dallas on October 14, 1997, in New

York City on October 27, 1997, and in

Baltimore on October 30, 1997. Requests

to present oral comments at one of the

public hearings should be directed to

Martha Thomas-Mitchell by calling

(202) 874–6757, or by sending an

Internet e-mail to martha.thomasmitchell@fms.sprint.com. See the

SUPPLEMENTARY INFORMATION for further

details concerning the hearings.

Comments on the proposed rule and

transcripts of the hearings will be

available for public inspection and

downloading at the web site address

shown above and for public inspection

and copying at the Department of the

Treasury Library, Room 5030, 1500

Pennsylvania Avenue, N.W.,

Washington, D.C. To make an

appointment to inspect comments and

transcripts, please call (202) 622–0990.

FOR FURTHER INFORMATION CONTACT:

Robyn Schulhof, Financial Program

Specialist, at (202) 874–6754; Diana

Shevlin, Financial Program Specialist,

at (202) 874–7032; Cynthia L. Johnson,

Director, Cash Management Policy and

Planning Division, at (202) 874–6590;

Sally Phillips, Senior Financial Program

Specialist, at (202) 874–6749; Margaret

Marquette, Attorney-Advisor at (202)

219–3320; or Natalie Diana, AttorneyAdvisor at (202) 874–6827.

SUPPLEMENTARY INFORMATION:

I. Background

A. Introduction

Section 31001(x) of the Act amends

31 U.S.C. 3332 to require agencies to

convert from paper-based payment

methods to EFT under regulations

issued by the Secretary. The Act, which

exempts only payments under the

Internal Revenue Code of 1986, provides

that the conversion from checks to EFT

be made in two phases.

During the first phase, which began

July 26, 1996, all Federal payments to

recipients who become eligible to

receive those payments on or after that

date must be made by EFT unless the

recipient provides a written certification

that the recipient does not have an

account with a financial institution 1 or

an authorized payment agent. On July

26, 1996, Treasury issued an interim

rule to implement these requirements.

61 FR 39254. The interim rule will

remain in effect through January 1,

1999.

Phase two begins on January 2, 1999;

after that date all Federal payments

must be made by EFT unless a waiver

is available. Under 31 U.S.C. 3332(f)(2),

the Secretary is authorized to waive the

EFT requirement in specified

circumstances based on standards

developed by the Secretary. The Act

requires recipients of Federal payments

(1) to designate a financial institution or

authorized agent to which the Federal

payments shall be made and (2) to

provide the agency that makes the

payments with the information needed

to make the payments by EFT. 12 U.S.C.

3332(g). The final rule, which will take

effect on January 2, 1999, is intended to

provide guidance to agencies and

recipients regarding compliance with

these requirements.

The Act makes EFT the standard for

Federal payments. In implementing the

Act, Treasury seeks to bring into the

mainstream of the financial system

those millions of Americans who

receive Federal payments and who

currently do not use the financial

system to receive funds, make

payments, save, borrow or invest.

Treasury’s goals in the implementation

process are simple, and focus on

payment recipients. These goals include

the following: making certain that

recipients have access to their funds at

a reasonable cost; providing appropriate

consumer protection; ensuring that the

system delivers payments and

information accurately, conveniently,

and in a timely manner; and

significantly increasing participation by

recipients in the country’s financial

system.

The Financial Management Service

(the ‘‘Service’’), a bureau in the

Department of the Treasury, is

responsible for implementation of the

Act. As the Federal Government’s

financial manager, the Service is

responsible for collecting and

disbursing public money. In fiscal year

1996, the Service issued more than 850

million payments. Approximately 81

percent of those payments (685 million

payments) were made to individuals

under various benefit programs such as

Social Security; the remaining payments

consisted of salary, vendor, loan, grant,

and tax refund payments.

In fiscal year 1996, approximately 53

percent of Treasury payments were

made by EFT. Making payment by EFT

benefits both recipients and the

Government. Agency records indicate

that recipients are 20 times less likely to

have a problem with an electronic

payment than with a paper check.

Unlike check payments, electronic
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules 48715

2Comments on the interim rule are available for

public inspection and copying at the Treasury

Library, Room 5030, 1500 Pennsylvania Avenue,

N.W., Washington, D.C.

payments are not susceptible to being

lost, stolen, or damaged in transit. In

those few cases where an electronic

payment is misrouted, it can be traced

and rerouted to the recipient, usually

within 24 hours after a claim of nonreceipt is received, compared to an

average of 14 days for a check. Further,

electronic payments are far less

susceptible to forgery or alteration than

checks. Each year, the Government

handles claims relating to

approximately $60 million in forged

checks, $1.8 million in counterfeit

checks, and $3.3 million in altered

checks.

EFT payments are also less costly

than checks. A check costs the

Government approximately 43 cents,

including postage, paper check stock

and labor costs. An EFT payment costs

approximately two cents. Full

implementation of the Act is expected

to achieve Government-wide savings of

about $100 million per year.

Over the past two decades, Treasury

has developed numerous products and

services to enable agencies to make EFT

payments. These include Direct Deposit,

Vendor Express, the Automated

Standard Application for Payments

(‘‘ASAP’’) and electronic benefits

transfer (‘‘EBT’’).

The Direct Deposit program is used by

agencies to make benefit payments, as

well as wage, salary, retirement,

allotment, and travel advance and

reimbursement payments.

The Vendor Express program transfers

payments directly into the accounts of

vendors and other commercial payees. It

also provides identifying information

about the payment, referred to as

remittance data, in an addendum to the

payment.

The ASAP system is an electronic

payments system used to deliver timesensitive Federal funds to organizations

that have a continuing relationship with

the Federal Government. ASAP is used

for grant payments and ‘‘same day’’

payments to contractors.

The above products primarily use the

Automated Clearing House (‘‘ACH’’)

network, a nationwide processing and

delivery facility that provides for the

distribution and settlement of electronic

financial transactions. Some of

Treasury’s payment services use

Fedwire, a funds transfer system

operated by the Federal Reserve System.

Fedwire is used primarily for large

dollar, small volume payments that

need to be confirmed immediately, such

as payments to businesses, State and

local governments, and educational

institutions.

Treasury, along with other agencies, is

continuously researching and

developing new electronic payment

products. In the near future, Treasury

expects to publish for comment a

proposal to amend its regulation dealing

with the use of the ACH network by

agencies. The revision of 31 CFR Part

210 will accommodate the current and

future use of the ACH network by

agencies.

B. Participation in Rulemaking Process

Treasury believes that the success of

the conversion to EFT depends on the

involvement of all interested parties in

the rulemaking process. In developing

the proposed rule, Treasury used a wide

variety of approaches to obtain data and

solicit input from these parties.

The interim rule specifically invited

the public to comment on obstacles to

receiving payments electronically, the

availability of banking services,

suggestions for new and improved

electronic payment methods, the role of

authorized payment agents, and the

needs of recipients without bank

accounts. The financial industry was

invited to discuss electronic payment

processing capabilities and suggestions

for new and improved electronic

payment methods. Agencies were asked

to submit implementation plans that

describe the types of payments they

make by check, the obstacles they face

in converting such payments to EFT,

suggestions for removing these

obstacles, timetables for converting

payments, and whether assistance is

needed.

Since the publication of the interim

rule, Treasury has held numerous

meetings with representatives from

consumer interest organizations and the

financial industry. Treasury also hosted

a consumer briefing session attended by

representatives from over 30 consumer

organizations and a similar briefing for

industry that was attended by

representatives from 13 financial trade

associations.

In addition, Treasury contracted for

two research studies related to the

electronic payment mandate. The

studies were used primarily to obtain

information regarding the characteristics

of Federal check recipients and to better

understand the needs of those

recipients, particularly with respect to

Federal benefit payments. The studies

are available on the Service’s EFT web

site at http://www.fms.treas.gov/eft/.

Treasury obtained input from

agencies through a number of forums,

including 11 regional meetings that

were attended by more than 1100

agency representatives. Treasury also

established an EFT Interagency Policy

Workgroup consisting of representatives

from 25 executive branch agencies.

Finally, Treasury has reviewed the

agency implementation plans submitted

in response to the interim rule.

C. Public Hearings

In addition, Treasury will hold three

public hearings on the proposed rule.

The first hearing will be held in Dallas

on October 14, 1997, at the Federal

Reserve Bank of Dallas, 2200 North

Pearl Street, Dallas, Texas. The second

hearing will be held in New York City

on October 27, 1997, at the U.S.

Alexander Hamilton Customs House, 1

Bowling Green, New York, New York.

The third hearing will be held in

Baltimore on October 30, 1997, at the

Baltimore Branch of the Federal Reserve

Bank of Richmond, 502 South Sharp

Street, Baltimore, Maryland. The

hearings in Baltimore and Dallas will

begin at 9:00 a.m. The hearing in New

York City will begin at 10:00 a.m.

Requests to present oral comments at

one of the public hearings should be

directed to Martha Thomas-Mitchell by

calling (202) 874–6757 or by sending an

Internet e-mail to martha-thomasmitchell@fms.sprint.com not later than

14 days before the date of the hearing.

Requests to present oral comments must

be accompanied by an outline of topics

to be discussed. In order to facilitate the

distribution of the comments to

attendees at the hearings, presenters

must submit, in writing, the text of the

comments to be made, at least three

business days prior to the hearing.

Presentations will be limited to

approximately 10 minutes or less.

Treasury reserves the right to impose

further time or other restrictions on all

presentations.

Please notify Martha Thomas-Mitchell

prior to the date of the public hearing

if any special arrangements or auxiliary

aids or services are needed.

II. Comments on the Interim Rule

Treasury received 33 comment letters

on the interim rule.2 The letters were

submitted by four consumer

organizations, nine trade and labor

organizations and associations, two

banks, four non-financial institutions,

two State government agencies, and

nine Federal agencies and offices. Three

organizations submitted two letters. The

comment letters generally supported the

Act and the interim rule, although

commenters expressed a wide range of

views regarding how best to achieve the

Act’s objectives.

The principal issues addressed in the

comment letters were the needs of
48716 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules

recipients who do not have bank

accounts; the need for consumer

protection in connection with EFT; the

definition of authorized payment agent

and the regulation of such entities; the

costs associated with EFT; waivers;

vendor payments; and the importance of

educating recipients about the EFT

mandate. Specific comments are

discussed below in the section-bysection analysis.

III. Section-by-Section Analysis

A. Section 208.1—Scope and

Application

With one exception, proposed § 208.1

is the same as the corresponding

provision in the interim rule. The

interim rule requires agencies to make

payments by EFT, ‘‘unless a waiver is

granted.’’ Treasury proposes to replace

this phrase with a reference to § 208.4

indicating that agencies and recipients

may rely upon the waivers described in

that section.

B. Section 208.2—Definitions

Section 208.2(a)—Agency

The definition of agency is identical

to the definition in the interim rule. For

a discussion of this term, see 61 FR

39254, 39255.

Section 208.2(b)—Authorized Payment

Agent

The term authorized payment agent

was the focus of extensive comment and

discussion. Some consumer

organizations urged Treasury to prohibit

certain entities from acting as

authorized payment agents, while other

organizations suggested that Treasury

impose a variety of substantive

restrictions on such entities. Some

commenters supported defining this

term as including non-financial

institutions as well as financial

institutions on the ground that this

would allow recipients without bank

accounts to have greater access to

electronic payments, while others urged

Treasury to limit the category to

Federally-insured financial institutions.

Concern was expressed about nonfinancial institutions that charge what

was described as excessively high fees

for check cashing and other financial

services. Treasury was urged to limit the

fees charged by authorized payment

agents for recipients to access their

funds and to regulate the contractual

arrangements between authorized

payment agents and recipients.

One commenter recommended that if

non-financial institutions were included

in the definition of ‘‘authorized

payment agent,’’ they should be

required to provide the same level of

consumer protection as financial

institutions.

One consumer organization argued

that only financial institutions and

‘‘possibly the U.S. Post Office’’ should

be permitted to act as authorized

payment agents because no limitations

on the contractual relationship between

the non-financial institution and the

recipient could protect the recipient

adequately. A group representing the

elderly expressed concern that if

nursing homes, assisted living facilities,

or other institutions with a financial

interest in the recipient’s payment are

permitted to act as payment agents, they

could impose excessive service fees.

A group representing check cashers

urged Treasury to define ‘‘authorized

payment agent’’ in a manner that would

allow check cashers to be designated as

authorized payment agents. The group

commented that check cashers were in

a unique position to deliver payments to

Federal recipients because of their

locations in areas where there are few

bank branches and because of the

customer service they provide.

A national money transmitter

commented that Treasury should allow

money transmitters to be authorized

payment agents because of their

numerous locations nationwide and

because of their experience in serving

those without bank accounts.

In formulating the proposed

regulation, Treasury has considered the

language of the Act, as well as the

protection of recipients, the comments

received, and consistency with other

Treasury regulations.

The Act refers to ‘‘authorized

payment agent,’’ ‘‘authorized agents,’’

and ‘‘agent.’’ Section 3332(e)(2) directs

an agency to waive the requirement to

receive payment by EFT during phase

one of the EFT mandate if the recipient

certifies in writing that he or she ‘‘does

not have an account with a financial

institution or an authorized payment

agent.’’

Section 3332(g) provides that:

Each recipient of Federal payments

required to be made by electronic funds

transfer shall—

(1) designate 1 or more financial

institutions or other authorized agents to

which such payments shall be made; and

(2) provide to the Federal agency that

makes or authorizes the payments

information necessary for the recipient to

receive electronic funds transfer payments

through each institution or agent designated

under paragraph (1).

(Emphases added.)

The Act, however, does not define

‘‘authorized payment agent,’’ and the

legislative history is silent on the

meaning of this term. Treasury believes

that all three terms—‘‘authorized

payment agent,’’ ‘‘authorized agents,’’

and agent’’—refer to the same entity or

entities and are to be construed

identically. The language quoted above

suggests that an authorized payment

agent is an entity other than a financial

institution. Further, this language could

be read as meaning that payment may be

made to an authorized payment agent,

either directly to an account held by an

authorized payment agent, or to an

account held by a financial institution

in the name of the authorized payment

agent.

At the present time, however,

Treasury cannot deliver a Federal

payment by EFT directly to an entity

other than a financial institution

because electronic financial transactions

are made primarily through the ACH

network and membership in the ACH

network system is limited to financial

institutions. Further, as a general rule,

the Federal Reserve Banks provide ACH

and wire services only to financial

institutions. Therefore, it is not possible

from an operational standpoint to

deliver Federal payments by EFT

directly to any entity that is not a

financial institution.

It is possible operationally to deliver

a payment by EFT to an account in the

name of an authorized payment agent

held by a financial institution. However,

the deposit of a Federal payment into an

account controlled by a third party other

than the person entitled to the payment

raises concerns about the protection of

the recipient’s interests. Specifically,

Treasury is concerned about the

potential failure of agents to honor their

obligations, especially since, except in

limited cases, there is no Federal

oversight of such arrangements.

Additionally, non-financial institutions

may not be subject to Federal consumer

protection laws. Therefore, defining

‘‘authorized payment agent’’ broadly

and permitting Federal payments to be

deposited into accounts controlled by a

wide range of entities may expose

recipients to the credit risk associated

with the failure of such authorized

payment agents. However, there is one

situation in which experience suggests

that it is in the best interest of the

recipient to make a Federal payment to

someone other than the recipient. This

situation involves recipients who are

physically or mentally incapable of

managing their payments.

Proposed § 208.2(b) defines

‘‘authorized payment agent’’ as any

individual or entity that is appointed or

otherwise selected as a representative

payee or fiduciary, under regulations of

the Social Security Administration

(‘‘SSA’’), the Department of Veterans
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules 48717

3 42 U.S.C. 1383(a)(2)(A)(ii)(I).

4 38 U.S.C. 5502.

5 45 U.S.C. 231k.

6See 20 CFR Parts 404, 410, 416, 266, and 348;

and 38 CFR Part 13.

7Section 208.6 also permits a Federal payment to

be deposited into an account in the name of a

securities broker or dealer. See discussion below.

8Treasury is aware that a few financial

institutions that are capable of receiving Federal

payments through the ACH system may not have

deposit insurance. The proposed rule does not

place any additional requirements on these

institutions, i.e., recipients who currently receive

Federal payments by EFT through such institutions

will not be required to make any changes to existing

arrangements.

Affairs (‘‘VA’’), the Railroad Retirement

Board (‘‘RRB’’)(collectively, the ‘‘benefit

agencies’’ for purposes of the section-bysection analysis), or other agency

making Federal payments, to act on

behalf of an individual entitled to a

Federal payment. The Social Security

Act permits the SSA to make a benefit

payment to ‘‘another individual, or an

organization’’ when doing so is in the

best interest of the recipient.3 The

Veterans’ Benefits Act 4 and the Railroad

Retirement Act 5 contain similar

provisions. SSA and the RRB use the

term ‘‘representative payee’’ to refer to

individuals and organizations that have

been selected to receive benefits on

behalf of a beneficiary who is ‘‘legally

incompetent or mentally incapable of

managing benefit payments.’’ The VA

uses the term ‘‘fiduciary’’ to refer to

individuals or organizations appointed

to serve in similar circumstances.

Other agencies, such as the Office of

Personnel Management, also make

Federal payments to individuals and

provide for representative payees and

fiduciaries. While not included by

name, the phrase ‘‘or other agency’’ in

the proposed definition is intended to

refer to these agencies.

SSA, the VA, and the RRB have

issued detailed regulations addressing

the qualifications and duties of

representative payees and fiduciaries.6

The rules governing these

representational relationships are longstanding and well established. In

addition, the definition of the term

‘‘recipient’’ in Treasury’s regulation

governing the use of ACH by agencies

refers to representative payees and

fiduciaries. See 31 CFR 210.2. In fiscal

year 1996, approximately 10 percent of

Social Security benefit payments (60

million payments) were made to

approximately five million

representative payees. Therefore,

Treasury believes that it is appropriate

to define the term ‘‘authorized payment

agent’’ by reference to existing practice

and the regulations of the agencies

making Federal payments.

The effect of the proposed definition

in § 208.2(b), together with the

requirement in § 208.6, which outlines

account requirements for purposes of

this rule, is that all Federal payments

will be made to an account at a financial

institution. Such account must be in the

name of the recipient or in the name of

an authorized payment agent who

stands in the shoes of the recipient for

purposes of payment.7 The involvement

of a financial institution at this stage

provides recipients and agencies with

important protections, namely, deposit

insurance in most cases 8 and the safety

and soundness associated with a

regulated financial institution. Treasury

specifically invites public comment on

the proposed definition of ‘‘authorized

payment agent’’ in § 208.2(b) and the

provision, § 208.6, in which this term is

used.

Section 208.2(c)—Electronic funds

transfer

The proposed definition of electronic

funds transfer in § 208.2(c) is similar to

the definition of that term in the Act. It

is identical to the definition in the

statute and the interim rule except that

the proposed definition includes a

statement that the term includes a credit

card transaction.

Treasury recognizes that the

definition of ‘‘electronic funds transfer,’’

as proposed, is somewhat broader than

the definition of that term in the

Electronic Fund Transfer Act, 15 U.S.C.

1693 (‘‘EFTA’’). Specifically, the credit

card transactions referred to in the

proposed rule do not satisfy the

definition of an EFT in the EFTA in that

the transaction does not debit or credit

a consumer asset account. In addition,

ACH transactions to or from a

commercial account would not be

covered by the EFTA.

Section 208.2(d)—Federal Payment

The definition of Federal payment is

the same in the proposed rule as in the

interim rule, except for minor technical

changes in the miscellaneous payments

section.

Section 208.2(e)—Financial Institution

The definition of financial institution

has been changed from the definition of

that term in the interim rule. The

proposed rule defines ‘‘financial

institution’’ to mean a depository

institution as defined in 12 U.S.C.

461(b)(1)(A), excluding subparagraphs

(v) and (vii), and an agency or branch of

a foreign bank as defined in 12 U.S.C.

3101. Under this definition, banks,

savings banks, credit unions, savings

associations, and United States-based

foreign bank branches would be

considered ‘‘financial institutions.’’ This

change has been made to reflect the

class of entities that can participate

directly in the ACH, i.e., financial

institutions that are authorized by law

to accept deposits.

Section 208.2(f)—Individual

Treasury proposes to add a definition

of individual. Proposed § 208.2(f)

defines ‘‘individual’’ to mean a natural

person.

Section 208.2(g)—Recipient

Treasury proposes to add a definition

of recipient. Proposed § 208.2(g) is based

on the definition of ‘‘recipient’’ in 31

CFR 210.2 and provides that ‘‘recipient’’

means an individual, corporation, or

other public or private entity that is

authorized to receive a Federal payment

from an agency.

Section 208.2(h)—Secretary

Proposed § 208.2(h) defines Secretary

to mean Secretary of the Treasury.

Section 208.2(i)—Treasury

Proposed § 208.2(i) defines Treasury

to mean the United States Department of

the Treasury.

The interim rule contains a definition

of the terms ‘‘benefit payment’’ and

‘‘payment.’’ Since the proposed rule

defines the term ‘‘Federal payment,’’

Treasury proposes to omit the definition

of ‘‘benefit payment’’ and ‘‘payment’’

from the rule.

C. Section 208.3—Payment by

Electronic Funds Transfer

Proposed § 208.3 implements 31

U.S.C. 3332(f)(1) and provides that,

notwithstanding any other provision of

law, all Federal payments made by an

agency after January 1, 1999, must be

made by EFT, unless one of the waivers

set forth in § 208.4 applies. Under the

definition of ‘‘Federal payment,’’

payments made under the Internal

Revenue Code of 1986 (i.e., tax refunds)

are excluded from the EFT mandate.

D. Section 208.4—Waivers

The Act authorizes the Secretary to

waive the requirement to make Federal

payments by EFT for individuals or

classes of individuals for whom

compliance imposes a hardship; for

classifications or types of checks; and in

other circumstances as may be

necessary. 31 U.S.C. 3332(f)(2)(A).

Subparagraph (B) of § 3332(f)(2) directs

the Secretary to make waiver

determinations based on standards

developed by the Secretary.

The interim rule invited public

comment on the need for waivers. In the
48718 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules

9The VA and the RRB report similar experiences.

public comments and in meetings with

agencies, the public, and industry,

several themes were expressed

repeatedly, regarding the standards that

should be developed for waivers.

The first standard is the need for

waivers where the conversion from

check to EFT imposes a hardship on the

recipient. Consumer organizations urged

Treasury to make waivers readily

available to all recipients who assert

that receiving payment by EFT would

impose a hardship.

The second standard is

‘‘impossibility.’’ Agencies noted that, for

a payment to be made by EFT and for

the recipient to gain access to the funds,

certain conditions must be present. EFT

requires a modern communications

system and the participation of financial

institutions with the requisite

operational capabilities. In addition, in

foreign countries, EFT requires a

reasonably stable political environment.

If these conditions are not present, EFT

becomes more difficult and, in some

cases, impossible.

The third standard is ‘‘cost-benefit.’’

Agencies described cases in which they

make small dollar payments or one-time

payments and urged Treasury to

authorize agencies to take into account

the costs and benefits of using EFT in

such cases.

The fourth standard relates to law

enforcement and national security.

Agencies engaged in law enforcement

and national security described

circumstances in which making a

payment by EFT would endanger the

safety of an agent or a person

cooperating with an agency.

Based on these four standards,

Treasury proposes to adopt the eight

waiver categories set forth in § 208.4.

Treasury considered adopting a process

under which agencies would apply to

Treasury for a waiver. However,

Treasury believes that an application

process would impose an unnecessary

administrative burden on the agencies

and Treasury and could delay the

processing of Federal payments. For

these reasons, the proposed regulation

does not require agencies to apply to

Treasury for the waivers that are

available to an agency. Instead, the

proposal contemplates that agency

officials will determine whether a

payment or class of payments falls

within one of the waiver categories

described in subsections (c) through (h).

As appropriate, Treasury will provide

guidance to agencies regarding the

various waiver categories.

In the case of the waivers available for

individuals, Treasury plans to develop,

and make available to agencies, model

language that an individual would use

to certify to the agency that receiving

payment by EFT would impose a

hardship due to one of the enumerated

barriers. The certification would be

based on the individual’s own

evaluation of his or her circumstances.

Treasury believes that this subjective

approach is consistent with

Congressional interest in minimizing

the hardship associated with conversion

from check to EFT for some recipients,

and recognizes the wide variety of

circumstances in which recipients live

and work. The proposed rule does not

anticipate that agencies will evaluate an

individual’s circumstances; rather,

Treasury expects that a waiver from

payment by EFT will be automatic and

based solely on the individual’s

certification.

Proposed § 208.4 (a) and (b) provide

waivers from the requirement to receive

payment by EFT for certain classes of

individuals for whom such requirement

would impose a hardship. Specifically,

proposed § 208.4(a) sets forth two

waivers for those individuals who have

an account with a financial institution

and who became eligible for a Federal

payment before July 26, 1996, and

§ 208.4(b) sets forth three waivers for

individuals who do not have an account

with a financial institution, regardless of

when they became eligible for payment.

There are no waivers for individuals

who have an account with a financial

institution and who become eligible for

a Federal payment on or after July 26,

1996 (‘‘newly-eligible recipients’’),

although there may be circumstances in

which an individual is paid by check

because the agency’s obligation to pay

by EFT is waived pursuant to a waiver

described in subsections (c) through (h).

Treasury’s proposal to tie the

availability of a waiver for an individual

who has a bank account to the date an

individual became eligible for the

Federal payment is based on a review of

its experience, and the experience of the

agencies responsible for the vast

majority of Federal payments, during

phase one. As noted above, the Act and

Treasury’s interim rule provide that

newly-eligible recipients must receive

payment by EFT unless the recipient

certifies in writing that he or she does

not have an account with a financial

institution. The SSA, which certifies

71% of the payments made by Treasury

each month, reports that approximately

76% of the recipients who became

eligible to receive Social Security and

Supplemental Security Income

payments since July 26, 1996, are

receiving payment by EFT.9 Benefit

agencies report that very few of these

recipients have indicated that receiving

payment by EFT would cause a

hardship of any kind.

Based on the favorable experience of

SSA and the other benefit agencies, and

the fact that newly-eligible recipients do

not have a history of receiving their

Federal benefit payments by check and,

therefore, would not experience a

change in the manner in which they

receive payment, Treasury proposes to

take an approach with respect to newlyeligible recipients who have an account

with a financial institution that parallels

the approach taken during phase one.

Therefore, the proposed rule provides

no waivers for these recipients, although

one or more of the waivers described in

subsections (c) through (h) may apply.

Under proposed § 208.4(a), an

individual who has an account with a

financial institution and who became

eligible to receive payment before July

26, 1996, would not be required to

receive payment by EFT where the use

of EFT would impose a hardship due to

either a physical disability or a

geographic barrier.

The Act does not define the term

‘‘hardship.’’ The legislative history

mentions geographical, physical,

mental, educational, and language

barriers, but does not define these terms.

Treasury and the benefit agencies

believe that, for the reasons discussed

more fully below, three of the five

categories mentioned—mental,

educational, and language—do not pose

a barrier to the use of EFT. These factors

can affect an individual’s ability to use

any method of payment, whether check

or EFT, and, therefore, there is no need

to provide waivers for these categories.

In fact, for many individuals, the safety

and reliability associated with EFT

outweigh the difficulty associated with

a new method of payment.

With regard specifically to mental

disabilities, Treasury notes that, as

mentioned above in the discussion on

‘‘authorized payment agent,’’ some

agencies have already provided in their

regulations for recipients who are

mentally incapable of managing their

payments. Under these regulations, an

individual or entity may be appointed

or otherwise selected to act on behalf of

an individual entitled to a Federal

payment. For example, when an

application for Social Security or

Supplemental Security Income benefits

is filed by or on behalf of an individual

who is not able to manage his or her

benefit payment, SSA’s regulations

provide for the appointment of a

representative payee. This person or

entity receives the payment and

arranges for the funds to be used for the

benefit of the individual. The method by
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules 48719

which payment is made to the

representative payee has no effect on the

actual recipient.

The proposed rule does not provide

waivers based on the recipient’s

educational level, limited literacy skills,

or lack of fluency in English. The

experience of Treasury and the benefit

agencies suggests that the obstacles

posed by these factors are not uniquely

associated with the use of EFT.

Educational and language barriers can

interfere with the comfortable and

successful use of any method of

payment, including checks and EFT. In

implementing EBT, the benefit agencies

have found that educational and

language barriers present a challenge in

making the transition to EFT, but the

transitional hurdle is short-lived and

ameliorated by educational programs

targeted to the specific needs of

recipients. The benefit agencies and the

financial industry have developed, and

are continuing to develop, educational

materials that assist recipients with

limited education or literacy skills in

making the transition to EFT. In

addition, Treasury intends to conduct

an extensive education campaign on

receiving payment by EFT.

Finally, with respect to language, the

benefit agencies and the financial

industry have programs to assist

recipients who do not speak English.

For example, in those parts of the

country where a language other than

English is predominant, SSA employees

assist recipients in their native

language. In these areas, many ATMs

and POS terminals offer the choice of

on-screen instructions in the

predominant language as well as

English. Also, materials provided during

the public education campaign will be

available in selected languages other

than English to accommodate nonEnglish speaking recipients.

Treasury believes, however, that there

are two instances in which recipients

who have an account with a financial

institution and who have previously

been receiving payment by check

should not be required to convert to

receiving payment by EFT; namely,

where a physical disability or a

geographic barrier would result in a

hardship to the individual.

For example, Treasury believes that a

waiver should be available to a recipient

with a physical disability who currently

has an arrangement with a nearby

grocery store to cash his or her monthly

check, but would have great difficulty

traveling even a short distance to a bank

or ATM to get his or her payment by

EFT. Similarly, Treasury believes that a

waiver should be available to someone

who lives in a rural area or on an Indian

reservation with limited access to

transportation or banking facilities and

who would have great difficulty getting

to a bank or ATM to receive payment by

EFT.

The proposed rule does not define

physical disability or specify what

constitutes a geographic barrier. In the

case of physical disability, Federal law

contains several definitions, including

those found in the Americans with

Disabilities Act, the Social Security Act,

and the Veterans’ Benefits Act. Treasury

believes that referencing in Part 208 all

applicable definitions of disability

would be unwieldy and confusing, and

that creating a new definition for

purposes of Part 208 would create an

unnecessary administrative burden for

agencies and recipients. In addition, in

light of the approach the proposed rule

takes with regard to the waiver process,

Treasury does not believe that it is

necessary to define physical disability

or specify what constitutes a geographic

barrier.

Under proposed § 208.4(b), an

individual who does not have an

account with a financial institution is

not required to receive payment by EFT

where the use of EFT would impose a

hardship on the individual due to a

physical disability or a geographic

barrier, or where the use of EFT would

impose a financial hardship on the

individual.

Waivers are provided for individuals

with a physical disability or a

geographic barrier for the reasons

discussed above. In addition, a third

waiver category—financial hardship—

has been provided for individuals who

do not have bank accounts, and for

whom Treasury will provide an account

as described in § 208.5. Although

financial hardship is not mentioned in

the legislative history, Treasury is aware

that some individuals who do not have

accounts with a financial institution

cash their checks at grocery stores and

other locations at little or no cost.

Treasury does not believe that Congress

intended such individuals to pay more

to receive payment by EFT than they

currently pay to receive payment by

check, particularly low-income

recipients whose Federal payment may

be their sole source of income.

Therefore, Treasury is proposing to

make a waiver available for these

individuals on this basis. The financial

hardship waiver is not available to

recipients who already have accounts

with financial institutions because these

individuals presumably will not incur

any additional expense to receive

payment by EFT.

The financial hardship waiver

proposed in § 208.4(b) will, as a

practical matter, take effect upon the

availability of the account described in

§ 208.5. Under the Act, Treasury is

required to ensure that individuals who

are required to have an account at a

financial institution in order to receive

Federal payments will have access to

such an account at a reasonable cost and

with the same consumer protections as

other account holders at the same

financial institution. Treasury is in the

process of designing such an account.

While Treasury is hopeful that the

account will be available nationwide by

January 2, 1999, and will make every

effort to achieve that goal, it is possible

that the account will not be available on

a nationwide basis by that time. For this

reason, the requirement to receive

payment by EFT is automatically

waived for all individuals who certify

that they do not have an account with

a financial institution until the earlier of

January 2, 2000, or the date as of which

the Secretary determines that the

account referred to in § 208.5 is

available.

Proposed § 208.4(c) provides that an

agency is not required to make a

payment by EFT where the political,

financial, or communications

infrastructure in a foreign country does

not support payment by EFT. This

waiver category responds to concerns

expressed by agencies that make

international payments. For example,

the SSA certifies benefit payments to

recipients in 132 countries around the

world but, at the present time,

international Direct Deposit is available

only in 10 countries. Treasury also

recognizes that in some countries,

payment by EFT is feasible in some

areas, such as large cities, but is not

feasible outside these areas. In such

cases, payments should be made

electronically to any area within the

country where the necessary

infrastructure exists, unless the

recipient qualifies for one of the other

waivers.

Proposed § 208.4(d) proposes a waiver

in those cases where a natural or other

disaster makes payment by EFT not

feasible. This waiver responds to

concerns raised by the Federal

Emergency Management Agency and

other disaster assistance agencies who

advised Treasury that, in areas affected

by natural disasters, financial

institutions may be closed or

inaccessible due to electrical or

telecommunications failure or structural

damage.

Treasury recognizes that agencies that

respond to emergencies must have the

flexibility to fulfill their missions, and

that providing payments to emergency

victims and emergency personnel must
48720 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules

10 61 FR 45776.

be done in the most efficient and

expedient manner possible. Therefore,

Treasury is proposing a waiver for

disaster assistance agencies making

payments to recipients residing in areas

that are designated by the President or

an authorized agency administrator as a

disaster area. The waiver period would

last for 120 days from the date the

disaster is declared. The disaster

assistance agencies indicated that most

emergency response phases do not last

longer than 120 days and that, after that

time, the financial and communications

infrastructure typically is restored so

that recipients can receive their

payments electronically. If the

emergency response time exceeds 120

days, the agency is expected to notify

Treasury in writing of the need to

extend the waiver period. The

notification should include a

justification for the extension and state

the length of the extension period

required.

Proposed § 208.4(e) provides a waiver

for payments made in response to

contingency operations conducted by

the Department of Defense. A

contingency operation is defined in 10

U.S.C. 101(a)(13) as a military operation

that either is designated by the Secretary

of Defense as an operation in which

armed forces undertake military actions

against an enemy or results in a call or

order to, or retention on, active duty of

members of the armed forces during a

war or national emergency declared by

the President or Congress.

Proposed § 208.4(f) provides a waiver

from the mandatory EFT requirement

where payment by EFT may pose a

threat to national security, jeopardize

the life or physical safety of an

individual, or compromise a law

enforcement action. Agencies engaged

in law enforcement and national

security, as well as the military, advised

Treasury that in many cases payment by

EFT is not feasible or could endanger

employees or other individuals. For

example, the physical safety of

undercover agents or participants in a

witness protection program could be

jeopardized by the audit trail left by an

electronic payment. Under the proposed

rule, a waiver also would be available

for military or other sensitive operations

where the provision of bank routing

information to third parties might

compromise the security of the

operation, thereby jeopardizing national

security.

Under proposed § 208.4(g), an agency

would not be required to make a

payment by EFT if the cost of using EFT

for making a non-recurring payment is

greater than the cost of making that

payment by check. Treasury considers

non-recurring to mean a frequency of

not more than once in a 12-month

period to the particular recipient. In

comments and in discussions with

Treasury, agencies frequently identified

non-recurring payments as a payment

class in which a check might be more

cost-effective than an EFT given the

administrative cost of enrolling a

recipient for an ACH payment. Since

one of the principal purposes of the Act

was to reduce the Government’s cost,

Treasury believes this is an appropriate

waiver category.

Agencies also questioned the wisdom

of requiring small dollar payments to be

made by EFT. Proposed § 208.4(g)

should not be read as a waiver for all

small dollar payments. The cost

associated with making a $100 payment

is proportionately higher than the cost

of making a $10,000 payment, regardless

of the payment method used. Thus, a

factor in addition to the dollar amount

of an individual payment is whether it

is a small dollar single payment or a

small dollar recurring payment.

Proposed § 208.4(h) provides that

agencies are not required to make

payments by EFT when public necessity

suggests that payment by methods other

than EFT is in the best interest of the

Government. An agency may determine

that a need for goods and services is of

such unusual and compelling urgency

that the Government would be seriously

injured if payment were required to be

made by EFT. Alternatively, an agency

may determine that, where there is only

one source for goods or services,

payment by a method other than EFT

would prevent serious injury to the

Government. Unusual and compelling

urgency means that there is a need to act

without delay to protect a legitimate

Government interest. Serious injury

means that the Government faces an

imminent loss of money or property, or

the disruption of a Federal program or

activity.

Treasury received a number of

comments from agencies expressing

concern that the Act would interfere

with their efforts to obtain goods or

services deemed essential to the

agencies’ missions in a timely fashion.

For example, in some cases, an agency

may have only one supplier of an

essential material or service, and that

supplier may not be able to accept

payment by EFT. While the Act clearly

requires vendors to accept payment by

EFT, Treasury recognizes that, in

limited cases, agencies require

flexibility in dealing with vendors who

are unable to receive EFT payments.

Agencies and other commenters asked

Treasury to consider making a waiver

available for vendor payments where,

because of system limitations or cost,

remittance data is not available to the

vendor. As noted above, remittance data

is information that identifies the

payment. This data permits the vendor

to reconcile funds received against

outstanding invoices.

A number of commenters stressed the

importance of passing remittance data

on to the vendor, stating that the lack of

remittance data is the primary reason

why vendors are reluctant to receive

payment by EFT. Several commenters

noted that many financial institutions

lack the capability to provide remittance

data to their depositors which requires

the translation of data from machine

readable to human readable form. It is

estimated that of the approximately

11,000 financial institutions which can

accept an electronic payment, fewer

than a thousand are capable of

translating remittance data into a human

readable form. In addition, financial

institutions sometimes charge their

customers for remittance data, which

also reduces the incentive for smaller

vendors to accept payment by EFT.

Treasury is working with agencies,

the financial industry, and vendors to

solve the remittance data problem. For

example, several pilots are underway to

test the feasibility of making remittance

data available through a variety of

methods, including on an agency’s web

site. The proposed rule does not contain

a waiver for vendor payments because

Treasury expects that, as a result of

these efforts, the problem of making

remittance data readily available will be

solved by January 1999. However,

Treasury will monitor developments

closely and will reconsider the need for

a waiver at that time.

Finally, several agencies noted that

the Federal Acquisition Regulation

(‘‘FAR’’) interim rule on Payment by

Electronic Funds Transfer, published on

August 29, 1996,10 exempts certain

classes of contracts from the Act.

Treasury is working with the

appropriate agencies to reconcile any

differences between the two rules.

E. Section 208.5—Access to Account

Provided by Treasury

Proposed § 208.5 provides that where

an individual certifies that he or she

does not have an account at a financial

institution, or where an individual fails

to respond to a request for information

pursuant to § 208.8, Treasury will,

pursuant to the Act’s mandate, provide

the individual with access to an account

at a Federally-insured financial

institution selected by Treasury. (All

such individuals will, of course, retain
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules 48721

11See 31 CFR 210.4(a).

12 31 U.S.C. 3332(i)(2).

13The notice of proposed rulemaking for

Treasury’s rule relating to electronic benefits

transfer, 31 CFR Part 207, describes the

disbursement of public funds and the statutory

basis for the use of financial agents. 62 FR 25572.

the right to establish their own account

relationships at institutions of their

choice.)

This section addresses the problem of

delivering Federal payments by EFT to

individuals who do not have an account

at a financial institution. In order to use

Direct Deposit, a recipient must have an

account at a financial institution.11 It is

estimated that approximately 10 million

individuals who receive Federal

payments do not have an account at a

bank, savings association, savings bank,

or credit union, and, therefore, cannot

receive payment by Direct Deposit.

One of Treasury’s domestic policy

objectives is to encourage individuals

who do not have an account at a

financial institution to move into the

financial services mainstream. Since the

Act was passed, Treasury has been

working with agencies and the financial

industry on educational efforts designed

to encourage individuals to open an

account at a financial institution so that

they can receive their Federal payments

by Direct Deposit. In addition, Treasury

and the financial industry are

participating jointly in the marketing of

Direct Deposit Too, which is a model for

a simple, low-cost, electronically

accessible deposit account. Treasury

hopes that many recipients without

accounts will open accounts as a result

of these public and private sector

educational and marketing efforts.

However, Treasury recognizes that a

certain percentage of individuals who

are required to receive payment by EFT,

i.e., individuals who are not eligible for

a waiver, likely will not have accounts

by the January 1999 deadline, and the

Act specifically requires that Treasury

regulations ensure access to an account

by individuals who are required to have

an account because of the EFT

mandate.12

Treasury considered several

approaches to implementing this

requirement. Several commenters

suggested that Treasury require

financial institutions to provide a basic

account at a reasonable price to

individuals without accounts. Treasury

does not believe that financial

institutions should be required to

provide these types of account services

as a result of the Act. Another approach

involves the development of a model

deposit account with an invitation to

financial institutions to offer this

account, at a specified price or at a price

below some ceiling determined by

Treasury, to individuals without

accounts. Treasury believes that

identifying institutions willing to

participate in a voluntary program and

monitoring their activities would

require the creation and maintenance of

a regulatory infrastructure. In addition,

it is possible that, in some geographic

areas, no institutions would be willing

to participate, resulting in gaps in

coverage.

A third approach is for Treasury to

engage one or more Federally-insured

financial institutions to act as Treasury’s

financial agent for the provision of

accounts to those individuals. Treasury

believes that this approach will enable

Treasury to perform its obligation under

31 U.S.C. 3332(i)(2) to ensure that all

individuals required to receive

payments electronically will have

access to an account at a financial

institution at a reasonable cost and with

consumer protections comparable to

those afforded other account holders at

such institutions. In addition, a number

of consumer organizations strongly

urged Treasury to permit only

Federally-insured financial institutions

to act as agent for Treasury to hold

accounts for individuals who do not

have such accounts. Treasury takes

seriously the concern expressed by

these commenters, and specifically

invites comment on this issue.

Treasury plans to obtain such account

services through a competitive process

that will select one or more entities to

act as Treasury’s agent to provide these

services to recipients that do not have,

or do not choose to open, accounts at

financial institutions of their own

choice. Any financial institution

designated by Treasury as its financial

agent will perform those functions that

involve the disbursement of public

funds, including the establishment of

the recipient’s account and the crediting

of the Federal payment to the account.

Other functions, however, may be

performed by non-financial institutions

working in partnership with the

financial agent.13

The proposed regulation does not

attempt to define the specific

characteristics of the account that will

be made available. Following the close

of the comment period on this notice of

proposed rulemaking, Treasury will

develop proposed terms, conditions,

and attributes of the account to be

offered and will publish this proposal

for a limited period of public comment.

After evaluating comments received,

Treasury will determine the specific

terms, conditions, and attributes of the

account to be offered and will request

that interested organizations submit

bids on the cost of providing such an

account within defined geographic

areas. Bidders also may be requested to

submit bids on different permutations of

alternative account structures and

geographic areas. It is anticipated that

such accounts will be offered on the

basis of a specified periodic service

charge paid by the recipient.

Treasury believes the design of these

Federally-provided accounts is critical

to the successful implementation of the

Act. While no final decisions have been

made as to the attributes of the account,

it is the preliminary view of Treasury

that each recipient should have an

individual account at a Federallyinsured financial institution that can be

directly accessed via plastic debit card

at any location of that institution,

including any automated teller

machines or point-of-sale terminals that

accept transactions by the institution’s

cardholders. Treasury has retained the

services of a consultant to evaluate and

provide advice to Treasury with respect

to both the account structure and the

design of the competitive selection

process for the account providers. In

addition, Treasury is seeking public

comment on this subject.

Commenters are encouraged to

provide their views on any issues that

they believe are important to the

successful design of this new account.

In submitting views, commenters

should consider that the cost of the

account to be offered by bidding

institutions is likely to be affected by

the range of attributes required to be

included in the account, as well as the

institutions’ expected average balance,

i.e., float, for the account. In particular,

Treasury requests comments on the

following questions:

• Should Treasury make available a

debit card-based account to individuals

who are required to receive Federal

payments by EFT and who do not have

an account of their own with a financial

institution?

• Should the cost of the account to

the recipient be the most important

factor for selecting the account structure

and/or the account providers, or should

the account structure be designed to

meet other objectives even if the cost to

recipients is increased as a result? If the

latter, which objectives? What is an

appropriate standard by which to weigh

tradeoffs between increased costs and

additional account features?

• Should the account be structured to

provide only a basic withdrawal service

at the lowest possible cost, with

additional service charges for additional

features, or should the account offer a

range of services at a fixed monthly cost,
48722 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules

14Section 208.6 would not prohibit the use of a

joint account between the recipient and a spouse or

other member of the recipient’s family so long as

the recipient has the right to withdraw funds from

the account.

15 31 CFR 210.4.

even if greater than the cost of a basic

account?

• How many withdrawals should be

included in the base price of the

account? Should the account terms

address the charges imposed by

automated teller machine owners other

than the account provider?

• Should the account structure

provide for additional electronic or

nonelectronic deposits within the basic

monthly service charge? If so, what

number of deposits?

• Should the account provide for

some number of third-party payments,

such as payments for rent or utility

bills? If so, how many third party

payments should be provided for and

should they be priced in the basic

monthly service charge?

• Should the account include a

savings feature? How would such a

feature operate? Would additional free

withdrawals or the capability to accept

deposits other than the Federal payment

act to foster savings by the recipient?

• How important is a broad

geographic reach to meeting the access

objectives that most recipients will

want? How should Treasury best meet

access needs in underserved areas?

Treasury has been urged to adopt

restrictions for the account that it

furnishes that would preclude

arrangements between the financial

institution at which the account is

maintained and third parties, such as

check cashers and money transmitters,

under which recipients might be

provided with additional means of

accessing the account. Those favoring

such restrictions argue that recipients

should be protected against excessive

charges that might be imposed for such

services. These arguments raise

important concerns, particularly with

respect to low-income recipients who

have in the past paid high fees to cash

government checks. In light of these

concerns, Treasury requests comment

on some additional questions relating to

the account it will design and make

available to recipients who do not have

bank accounts:

• Should access to the account be

provided at outlets in addition to those

normally offered by the financial

institution providing the account? For

example, should arrangements be

permitted under which third parties

may offer other means by which a

recipient may, in effect, withdraw funds

from the account. If yes, should there be

any restrictions on where additional

access may be provided or under what

terms it can be offered?

• If additional access is offered

through arrangements with third parties,

should the cost of this additional access

be included in the pricing proposal in

the competitive bid process?

• Which account design would

provide the appropriate opportunity for

non-financial institutions to participate

in the delivery of services to Federal

payment recipients?

Treasury will make every effort to

ensure that the account referred to in

§ 208.5 will be available throughout the

country by January 2, 1999. Moreover,

Treasury has been working with a

number of States to link the delivery of

Federal payments to State EBT

programs. Where such linkage occurs,

recipients who receive a Federal

payment, such as Supplemental

Security Income, as well as benefits

under a State-administered program, for

example, Food Stamps, will be offered

an option of accessing both benefits by

means of a single card. However, as

discussed above in connection with

proposed § 208.4(b), in the event that

the account described in § 208.5 is not

available, the requirement to receive a

Federal payment by EFT will be waived

for individuals who certify that they do

not have an account with a financial

institution until the earlier of January 2,

2000, or the date as of which the

Secretary determines that the account is

available.

F. Section 208.6—Account

Requirements

Proposed § 208.6 addresses account

requirements for Federal payments

made by EFT. The proposal sets forth a

general rule for all Federal payments,

and then provides two exceptions from

the general rule for situations that

involve an authorized payment agent or

an investment account established

through a registered securities broker or

dealer.

Under § 208.6(a), all Federal

payments made by EFT must be

deposited into an account in the name

of the recipient at a financial institution,

unless one of the exceptions described

in subsection (b) applies. The

requirement to deposit the payment into

an account in the name of the

recipient 14 is consistent with Treasury’s

regulations governing use of the ACH 15

and thus provides continuity with

existing arrangements for the Direct

Deposit of Federal payments.

Proposed § 208.6(b)(1) addresses cases

in which an authorized payment agent

has been selected or designated. In such

cases, the account may be titled in any

manner that satisfies the regulations of

the appropriate agency. See the

discussion of ‘‘authorized payment

agent’’ in the section-by-section analysis

of § 208.2(b) above.

Proposed § 208.6(b)(2) permits a

Federal payment to be deposited into an

account in the name of a broker or

dealer registered under the Securities

Exchange Act of 1934 with whom the

recipient has an account. Treasury is

aware that many brokers and dealers

offer services that combine investment

and transaction features. In these

services, funds deposited into an

account at a financial institution—

which may be in the name of the

securities broker or the name of the

customer—are swept out of such an

account on a regular basis and into an

investment vehicle owned by the

recipient. When the customer uses the

funds for transaction purposes, whether

by credit or debit card or check, the

funds needed to cover the transaction

are transferred out of the investment

vehicle.

Such services offer cash management

features, and Treasury sees no reason to

discourage recipients of Federal

payments from using these services,

provided certain protections are

available, namely, that the broker or

dealer is registered under the Securities

Exchange Act of 1934 and that the

recipient’s funds are protected by

deposit insurance during the time the

funds are on deposit at the financial

institution.

The registration requirement ensures

that the broker or dealer is subject to

certain basic requirements such as

membership in the appropriate selfregulatory organization, membership in

the Securities Investor Protection

Corporation, recordkeeping and

reporting requirements, and net capital

requirements. In addition, such brokers

and dealers are subject to inspections by

the Securities and Exchange

Commission and the self-regulatory

organizations. The requirement that the

account and associated records be

structured so that the recipient’s interest

is protected under applicable Federal or

state deposit insurance regulations

ensures that the recipient’s interest in a

master account is individually insured

to the same extent it would be if the

account were in the name of the

recipient alone.

Other than payments made to an

authorized payment agent or an

investment account, Federal payments

made by EFT must be deposited to an

account at a financial institution. The

proposed rule is silent on the role that

non-financial institutions may play in

the delivery of Federal payments to
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules 48723

recipients with bank accounts and the

relationship between non-financial

institutions and such recipients.

Treasury anticipates that non-financial

institutions will continue to have the

opportunity to partner with financial

institutions and to market products and

services to recipients. Treasury’s

research and the comments received on

the interim rule indicate that nonfinancial institutions have performed

such functions in the past and are

developing new products and services

that will allow them to serve recipients

who receive their Federal payments by

EFT. Treasury specifically invites

comments on this opportunity for

market innovations.

The use of such products and services

would be purely voluntary on the part

of recipients who would continue to be

able to access their payments directly at

a financial institution of their choice if

they chose not to use the services of a

non-financial institution. These

relationships are distinguished from the

account that Treasury proposes to

provide for individuals who do not have

an account with a financial institution.

See § 208.5.

Treasury has been urged to interpret

the Act as requiring regulation of the

fees charged by financial institutions

and the imposition of certain consumer

protections on the services they offer.

Consumer organizations urged Treasury

to limit the fees that authorized

payment agents may charge for their

services, and suggested that reasonable

costs for recipients without bank

accounts should range from no cost to

low cost. Some commenters suggested

that Treasury either subsidize or

regulate account fees. Other commenters

stated that efforts to reduce costs for the

Government should not place an undue

financial burden on the private sector.

These commenters opposed Treasury’s

defining ‘‘reasonable cost’’ or

establishing limits on fees, and

expressed concern that their costs

would exceed any ceiling on fees set by

Treasury. They considered ‘‘reasonable

cost’’ to include all costs plus a

reasonable profit and argued that to

regulate otherwise would discourage the

private sector from developing systems

to address problems posed by the

electronic payment mandate.

Section 3332(i)(2) provides:

Regulations under this subsection shall

ensure that individuals required under

subsection (g) to have an account at a

financial institution because of the

application of subsection (f)(1)—

(A) will have access to such an account at

a reasonable cost; and

(B) are given the same consumer

protections with respect to the account as

other account holders at the same financial

institution.

This provision could possibly be

interpreted in two ways. The

requirement that Treasury ensure access

to an account could be read very

broadly to refer to all individual

recipients who receive their Federal

payments by EFT, whether or not they

already have an account. Such a broad

interpretation potentially would place

Treasury in the position of determining

the reasonableness of prices charged by

thousands of financial institutions, for a

wide variety of account services, to

individuals who have account

relationships at institutions they have

chosen voluntarily.

Section 3332(i)(2) also could be read

more narrowly as referring to those

individuals who, as of January 2, 1999,

have not voluntarily selected or opened

an account at a financial institution and

who will need access to such an account

in order to receive a Federal payment by

EFT.

Treasury believes the latter

interpretation is the better one, i.e., that

§ 3332(i)(2) should be read to require

Treasury to provide ‘‘unbanked’’

individuals with access to a reasonablypriced account at a financial institution.

Treasury does not believe that there

should be widespread regulation of the

prices of deposit services voluntarily

obtained by recipients in a competitive

marketplace. Gathering information

about the prices charged for accounts by

financial institutions throughout the

United States and evaluating those

prices to determine their reasonableness

would impose a heavy administrative

burden both on the industry and on

Treasury. In addition, widespread price

regulation would interfere with the

functioning of the market for account

services. Accordingly, the reasonable

cost and consumer protection standards

will be applied as specified in § 208.5 to

any account provided by Treasury to

individuals who do not otherwise have

access to an account.

G. Section 208.7—Agency

Responsibilities

Section 208.3 of the proposed rule

sets forth the general rule that, effective

January 2, 1999, all Federal payments

for which a waiver is not available must

be made by EFT. Proposed § 208.7

describes the agencies’ operational

responsibilities in carrying out this

mandate.

First, under proposed § 208.7(a), an

agency must collect from each recipient

who is required to receive payment by

EFT and who has an account with a

financial institution the information

required to make the payment. This

information can be collected

electronically through the ACH system

by use of an Automated Enrollment

Entry (ENR). The ENR is a new ACH

entry that was specifically designed to

meet the needs of agencies as a

replacement for the paper form that has

been used for enrollment in the Direct

Deposit program. The phrase, ‘‘who is

required to receive payment by

electronic funds transfer,’’ is an

acknowledgment that waivers will

apply in some cases.

Under this section, agencies are

required to collect the information

needed to make a payment through the

ACH network, namely, the recipient’s

account number and the financial

institution’s name and routing number.

Treasury encourages agencies to collect

this information at the earliest possible

opportunity in their dealings with

potential recipients of Federal

payments. For vendor payments,

agencies are encouraged to collect this

information as a condition of awarding

a contract, issuing a purchase order, or

formalizing an agreement to obtain

goods or services. Collection of this

information as a condition of award

ensures that the agency is doing

business only with vendors who are

willing and able to accept an EFT

payment and consequently ensures that

all vendor payments, unless waived

under § 208.4, will be made by EFT.

In order to ensure compliance by

January 2, 1999, agencies must take

action as early as possible in 1998 to

inform recipients who still receive

checks of the requirement to convert to

EFT. Collection of the required

information should begin no later than

July 1, 1998, and recipients should be

encouraged to convert to EFT as soon as

possible.

Under proposed § 208.7(b), agencies

are directed to obtain from individuals

who do not have an account at a

financial institution a written

certification that the individual does not

have an account with a financial

institution unless the individual has

determined that he or she needs a

hardship waiver. Treasury will provide

individuals who certify that they do not

have an account with access to an

account in accordance with § 208.5.

Proposed § 208.7(c) directs agencies to

obtain from any individual who applies

for a waiver under § 208.4 (a) or (b) a

written certification that receiving

payment by EFT would impose a

hardship. As indicated above, agencies

may rely upon the individual’s assertion

that a hardship exists; Treasury does not

expect agencies to go beyond the

certification to evaluate the individual’s

circumstances.
48724 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules

H. Section 208.8—Recipient

Responsibilities

Proposed § 208.8(a) implements 31

U.S.C. 3332(g), which requires

recipients of Federal payments who are

required to receive payment by EFT to

designate a financial institution or an

authorized payment agent to which

payment will be made and provide the

agency that makes or authorizes the

payment with the information needed in

order to deliver the payment by EFT.

Under the Privacy Act (5 U.S.C. 552a),

such information is considered

confidential with respect to individuals,

and may not be disclosed by the agency

except as authorized by law.

Proposed § 208.8(b) provides that an

individual who is required to receive

payment by EFT and who does not have

an account at a financial institution

must certify in writing to the agency

making the payment that he or she does

not have an account. Such an individual

will be provided with access to an

account provided by Treasury unless he

or she is eligible for a waiver. See the

discussion of § 208.5 above.

Proposed § 208.8(c) requires all

individuals who apply for a waiver

under § 208.4 (a) or (b) to certify in

writing that receiving payment by EFT

would impose a hardship. As discussed

above in the section-by-section analysis

of § 208.4, an individual’s certification

would be based on the individual’s own

evaluation of his or her circumstances.

I. Section 208.9—Compliance

Section 208.9 of the proposed rule

provides for Treasury to monitor

agencies’ compliance with the EFT

mandate. It further provides that

agencies that fail to make payment by

EFT as required under this part may be

assessed a charge in accordance with 31

U.S.C. 3335.

Treasury expects agencies to be in

compliance with the Act and this part

by January 2, 1999, and will begin to

monitor compliance as of that date. In

order to avoid placing an unnecessary

administrative burden on agencies,

Treasury does not intend to impose an

ongoing reporting requirement on

agencies that are in compliance with the

EFT mandate. Agencies found to be in

noncompliance, however, may be

required to submit information on the

methods by which they make payments.

Further, such agencies may be assessed

a charge equal to an amount determined

by the Secretary to be the cost to the

general fund of the Treasury caused by

such noncompliance.

J. Section 208.10—Reservation of Rights

Proposed § 208.10 specifically

authorizes the Secretary to waive any

provision of the rule. This provision has

been included in the event that

circumstances make such a waiver

necessary or appropriate. Under this

provision, the Secretary could grant a

waiver not specifically provided for in

this part without having to amend the

rule.

IV. Special Analysis

Although it has been determined that

this proposed regulation is a significant

regulatory action for purposes of section

3(f)(4) of Executive Order 12866, the

Office of Management and Budget

(‘‘OMB’’) has waived the preparation of

a Regulatory Assessment.

Pursuant to the Regulatory Flexibility

Act, it is hereby certified that the

proposed regulation, if adopted, will not

have a significant economic impact on

a substantial number of small entities.

Treasury has included eight categories

of waivers in the proposed rule. The

first two categories are designed

specifically to alleviate hardships that

might be imposed on individuals,

including sole proprietors, as a result of

the mandatory conversion from check to

EFT. Further, the proposed rule does

not prohibit small entities from

participating in the delivery of services

to recipients who receive their Federal

payments by EFT. Therefore, Treasury

believes the rule does not have a

significant economic impact on a

substantial number of small entities and

that a regulatory flexibility analysis is

not required. Treasury welcomes,

however, all comments and specifically

any comments related to the impact of

the proposed rule on small entities.

The Paperwork Reduction Act of 1995

requires that collections of information

prescribed in the proposed rules be

submitted to the OMB for review and

approval. Under this Act, 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 OMB control number.

Comments on the collection of

information may be submitted to the

Office of Management and Budget,

Office of Information and Regulatory

Affairs, Attention: Desk Office for the

Department of the Treasury, Financial

Management Service, Washington, D.C.

20503, with copies to Jacqueline Perry,

Public Reports Clearance Officer,

Financial Management Service, 3361

75th Avenue, Landover, Maryland

20785.

The collection of information in this

proposed regulation is contained in

§ 208.8. The information (name of

financial institution, routing number,

and account number) is required to

enable an agency to pay a recipient of

a Federal payment by EFT. The

collection of information is mandatory.

Section 3332(g), as amended, requires

recipients of Federal payments to

‘‘provide to the Federal agency that

makes or authorizes the payments

information necessary for the recipient

to receive electronic funds transfer

payments.’’ The likely respondents vary

depending on the agency making the

payment. For the Service, the likely

respondents are employees of the

Service who currently receive

payments, such as payments for salary,

travel reimbursement, or retirement, by

check; and individuals and vendors that

currently receive vendor payments by

check.

The estimated total annual reporting

burden is 46 hours. The estimated

burden hours per respondent is 0.25

hours. The estimated number of

respondents is 183. These figures

represent the burden imposed by the

Service. The reporting burden imposed

by other agencies will be addressed by

those agencies.

Comments are specifically requested

on:

1. Whether the proposed collection of

information is necessary for the proper

performance of functions of the Service,

including whether the information will

have practical utility;

2. The accuracy of the estimated

burden associated with the proposed

collection of information;

3. How the quality, utility, and clarity

of the information to be collected may

be enhanced; and

4. How the burden of complying with

the proposed collection of information

may be minimized, including through

the application of automated collection

techniques and other forms of

information technology.

List of Subjects in 31 CFR Part 208

Accounting, Banks, Banking,

Electronic Funds Transfer.

Authority and Issuance

For the reasons set out in the

preamble, Part 208 of Title 31 is

proposed to be revised to read as

follows.

PART 208—MANAGEMENT OF

FEDERAL AGENCY DISBURSEMENTS

Sec.

208.1 Scope and application.

208.2 Definitions.

208.3 Payment by electronic funds transfer.

208.4 Waivers.

208.5 Access to account provided by

Treasury.

208.6 Account requirements.

208.7 Agency responsibilities.

208.8 Recipient responsibilities.
Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules 48725

208.9 Compliance.

208.10 Reservation of rights.

Authority: 5 U.S.C. 301; 31 U.S.C. 321,

3301, 3302, 3321, 3325, 3327, 3328, 3332,

3335, and 6503.

§ 208.1 Scope and application.

This part applies to all Federal

payments made by an agency and,

except as specified in § 208.4, requires

such payments to be made by electronic

funds transfer. This part does not apply

to payments under the Internal Revenue

Code of 1986 (26 U.S.C.).

§ 208.2 Definitions.

(a) Agency means any department,

agency, or instrumentality of the United

States Government, or a corporation

owned or controlled by the Government

of the United States.

(b) Authorized payment agent means

any individual or entity that is

appointed or otherwise selected as a

representative payee or fiduciary, under

regulations of the Social Security

Administration, the Department of

Veterans Affairs, the Railroad

Retirement Board, or other agency

making Federal payments, to act on

behalf of an individual entitled to a

Federal payment.

(c) Electronic funds transfer means

any transfer of funds, other than a

transaction originated by cash, check, or

similar paper instrument, that is

initiated through an electronic terminal,

telephone, computer, or magnetic tape,

for the purpose of ordering, instructing,

or authorizing a financial institution to

debit or credit an account. The term

includes, but is not limited to,

Automated Clearing House transfers,

Fedwire transfers, and transfers made at

automated teller machines and point-ofsale terminals. For purposes of this part

only, the term electronic funds transfer

includes a credit card transaction.

(d) Federal payment means any

payment made by an agency.

(1) The term includes, but is not

limited to:

(i) Federal wage, salary and retirement

payments;

(ii) Vendor and expense

reimbursement payments;

(iii) Benefit payments; and

(iv) Miscellaneous payments

including, but not limited to:

interagency payments; grants; loans;

fees; principal, interest, and other

payments related to U.S. marketable and

nonmarketable securities; overpayment

reimbursements; and payments under

Federal insurance or guarantee

programs for loans.

(2) For purposes of this part only, the

term ‘‘Federal payment’’ does not apply

to payments under the Internal Revenue

Code of 1986.

(e) Financial institution means:

(1) An entity described in section

19(b)(1)(A), excluding subparagraphs (v)

and (vii), of the Federal Reserve Act (12

U.S.C. 461(b)(1)(A)). Under section

19(b)(1)(A) of the Federal Reserve Act

and for purposes of this part only, the

term ‘‘depository institution’’ means:

(i) Any insured bank as defined in

section 3 of the Federal Deposit

Insurance Act (12 U.S.C. 1813) or any

bank which is eligible to make

application to become an insured bank

under section 5 of such Act (12 U.S.C.

1815);

(ii) Any mutual savings bank as

defined in section 3 of the Federal

Deposit Insurance Act (12 U.S.C. 1813)

or any bank which is eligible to make

application to become an insured bank

under section 5 of such Act (12 U.S.C.

1815);

(iii) Any savings bank as defined in

section 3 of the Federal Deposit

Insurance Act (12 U.S.C. 1813) or any

bank which is eligible to make

application to become an insured bank

under section 5 of such Act (12 U.S.C.

1815);

(iv) Any insured credit union as

defined in section 101 of the Federal

Credit Union Act (12 U.S.C. 1752) or

any credit union which is eligible to

make application to become an insured

credit union pursuant to section 201 of

such Act (12 U.S.C. 1781);

(v) Any savings association (as

defined in section 3 of the Federal

Deposit Insurance Act) (12 U.S.C. 1813)

which is an insured depository

institution (as defined in such Act) (12

U.S.C. 1811 et seq.) or is eligible to

apply to become an insured depository

institution under the Federal Deposit

Insurance Act (12 U.S.C. 1811 et seq.);

and

(2) Any agency or branch of a foreign

bank as defined in section 1(b) of the

International Banking Act, as amended

(12 U.S.C. 3101).

(f) Individual means a natural person.

(g) Recipient means an individual,

corporation, or other public or private

entity that is authorized to receive a

Federal payment from an agency.

(h) Secretary means Secretary of the

Treasury.

(i) Treasury means the United States

Department of the Treasury.

§ 208.3 Payment by electronic funds

transfer.

Subject to § 208.4, and

notwithstanding any other provision of

law, effective January 2, 1999, all

Federal payments made by an agency

shall be made by electronic funds

transfer.

§ 208.4 Waivers.

Payment by electronic funds transfer

is not required in the following cases:

(a) Where an individual who became

eligible for a Federal payment before

July 26, 1996, and who has an account

with a financial institution, certifies that

payment by electronic funds transfer

would impose a hardship on him or her

due to a physical disability or

geographic barrier;

(b) Where an individual certifies that

he or she does not have an account with

a financial institution and that payment

by electronic funds transfer under

§ 208.5 would impose a hardship due to

a physical disability or geographic

barrier, or would impose a financial

hardship. In addition, the requirement

to receive payment by electronic funds

transfer is automatically waived for all

individuals who certify that they do not

have an account with a financial

institution until the earlier of January 2,

2000, or the date as of which the

Secretary determines that the account

referred to in § 208.5 is available;

(c) Where the political, financial, or

communications infrastructure in a

foreign country does not support

payment by electronic funds transfer;

(d) Where the payment is to a

recipient within an area designated by

the President or an authorized agency

administrator as a disaster area. This

waiver is limited to payments made

within 120 days after the disaster is

declared;

(e) Where either:

(1) A military operation is designated

by the Secretary of Defense in which

armed forces undertake military actions

against an enemy, or

(2) A call or order to, or retention on,

active duty of members of the armed

forces is made during a war or national

emergency declared by the President or

Congress;

(f) Where a threat may be posed to

national security, the life or physical

safety of any individual may be

endangered, or a law enforcement action

may be compromised;

(g) Where the payment is nonrecurring and the cost of making the

payment via electronic funds transfer

exceeds the cost of making the payment

by check. For purposes of this rule,

‘‘non-recurring’’ means the agency does

not expect to make more than one

payment to the same recipient within a

one-year period; and

(h) Where an agency’s need for goods

and services is of such unusual and

compelling urgency that the

Government would be seriously injured

unless payment is made by a method

other than electronic funds transfer; or,

where there is only one source for goods
48726 Federal Register / Vol. 62, No. 179 / Tuesday, September 16, 1997 / Proposed Rules

or services and the Government would

be seriously injured unless payment is

made by a method other than electronic

funds transfer.

§ 208.5 Access to account provided by

Treasury.

Where the requirement to pay by

electronic funds transfer is not waived

under § 208.4 and an individual either

certifies that he or she does not have an

account with a financial institution, or

fails to provide information pursuant to

§ 208.8, Treasury shall provide the

individual with access to an account at

a Federally-insured financial institution

selected by Treasury. Such account will

be provided at reasonable cost to the

individual and with the same consumer

protections as other accounts at the

same financial institution.

§ 208.6 Account requirements.

(a) All Federal payments made by

electronic funds transfer shall be

deposited into an account at a financial

institution. The account at the financial

institution shall be in the name of the

recipient, except as provided in

paragraph (b) of this section.

(b) (1) Where an authorized payment

agent has been selected, the Federal

payment shall be deposited into an

account titled in accordance with the

regulations governing the authorized

payment agent.

(2) Where a Federal payment is to be

deposited into an investment account

established through a securities broker

or dealer registered under the Securities

Exchange Act of 1934, such payment

may be deposited into an account in the

name of the broker or dealer, provided

the account and all associated records

are structured so that the recipient’s

interest is protected under applicable

Federal or state deposit insurance

regulations.

§ 208.7 Agency responsibilities.

An agency shall:

(a) Obtain from each recipient who is

required to receive payment by

electronic funds transfer and who has

an account with a financial institution,

the information required to make such

payment;

(b) Obtain from each individual who

is required to receive payment by

electronic funds transfer and who

indicates that he or she does not have

an account with a financial institution,

a written certification that the

individual does not have an account

with a financial institution; and

(c) Obtain from each individual who

applies for a waiver under § 208.4(a) or

(b) a written certification that receiving

payment by electronic funds transfer

would impose a hardship.

§ 208.8 Recipient responsibilities.

(a) Each recipient who is required to

receive payment by electronic funds

transfer and who has an account with a

financial institution must, within the

time frame specified by the agency

making the payment, designate a

financial institution through which the

payment may be made and provide the

agency with the information requested

by the agency in order to effect payment

by electronic funds transfer.

(b) Each individual who is required to

receive payment by electronic funds

transfer and who does not have an

account with a financial institution

must certify in writing, within the time

frame specified by the agency making

the payment, that he or she does not

have an account with a financial

institution. Such individual will be

provided an account as indicated in

§ 208.5.

(c) Each individual who qualifies for,

and wishes to apply for, a waiver under

§ 208.4(a) or (b) must certify in writing,

within the time frame specified by the

agency making the payment, that

receiving payment by electronic funds

transfer would impose a hardship.

§ 208.9 Compliance.

(a) Treasury will monitor agencies’

compliance with this part. Treasury may

require agencies to provide information

about the methods by which they make

payments.

(b) If an agency fails to make payment

by electronic funds transfer, as

prescribed under this part, Treasury

may assess a charge to the agency

pursuant to 31 U.S.C. 3335.

§ 208.10 Reservation of rights.

The Secretary reserves the right, in

the Secretary’s discretion, to waive any

provision(s) of the regulations in this

part in any case or class of cases.

Dated: September 11, 1997.

Russell D. Morris,

Commissioner.

[FR Doc. 97–24553 Filed 9–15–97; 8:45 am]

BILLING CODE 4810–35–P