1560 Federal Register / Vol. 73, No. 6 / Wednesday, January 9, 2008 / Proposed Rules 

Related Information 

(h) European Aviation Safety Agency 

airworthiness directive 2007–0214, dated 

August 7, 2007, also addresses the subject of 

this AD. 

Issued in Renton, Washington, on 

December 19, 2007. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. E8–152 Filed 1–8–08; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Fiscal Service 

31 CFR Part 210 

RIN 1510–AB00 

Federal Government Participation in 

the Automated Clearing House 

AGENCY: Financial Management Service, 

Fiscal Service, Treasury. 

ACTION: Notice of proposed rulemaking 

with request for comment. 

SUMMARY: We are proposing to amend 

our regulation which governs the use of 

the Automated Clearing House (ACH) 

system by Federal agencies. That 

regulation adopts, with some 

exceptions, the ACH Rules developed 

by NACHA—The Electronic Payments 

Association (NACHA) as the rules 

governing the use of the ACH Network 

by Federal agencies. We are issuing this 

proposed rule to address changes that 

NACHA has made to the ACH Rules 

since the publication of NACHA’s 2005 

ACH Rules book. We are proposing to 

adopt, with one exception, all of the 

changes that NACHA has approved 

since the issuance of the 2005 ACH 

Rules book, as reflected in the 2007 

ACH Rules book. 

In addition, the proposed rule would 

provide two exceptions to the deposit 

account requirement in the regulation. 

The regulation requires that an ACH 

credit entry representing a Federal 

payment other than a vendor payment 

be deposited into a deposit account at 

a financial institution in the name of the 

recipient. On April 21, 2005, Treasury 

waived this requirement in order to 

allow some or all of the amount to be 

reimbursed to a Federal employee for 

official travel credit card charges to be 

disbursed directly to the credit card 

issuing bank. The proposed rule would 

codify this waiver. The proposed rule 

would also provide an exception from 

the requirements in cases where a 

Federal payment is to be disbursed 

through a debit card, stored value card, 

prepaid card or similar payment card 

program established by the Financial 

Management Service (Service). 

DATES: Comments on the proposed rule 

must be received by March 10, 2008. 

ADDRESSES: You can download this 

proposed rule at the following Web site: 

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

also inspect and copy this proposed rule 

at: Treasury Department Library, 

Freedom of Information Act (FOIA) 

Collection, Room 1428, Main Treasury 

Building, 1500 Pennsylvania Avenue, 

NW., Washington, DC 20220. Before 

visiting, you must call (202) 622–0990 

for an appointment. 

In accordance with the U.S. 

government’s eRulemaking Initiative, 

the Service publishes rulemaking 

information on www.regulations.gov. 

Regulations.gov offers the public the 

ability to comment on, search, and view 

publicly available rulemaking materials, 

including comments received on rules. 

Comments on this rule, identified by 

docket FISCAL–FMS–2007–2008, 

should only be submitted using the 

following methods: 

• Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions on the Web site for 

submitting comments. 

• Mail: Bill Brushwood, Financial 

Management Service, 401 14th Street, 

SW., Room 400A, Washington, DC 

20227. 

• The fax and e-mail methods of 

submitting comments on rules to the 

Service have been retired. 

Instructions: All submissions received 

must include the agency name 

(‘‘Financial Management Service’’) and 

docket number FISCAL–FMS–2007–

0008 for this rulemaking. In general, 

comments will be published on 

Regulations.gov without change, 

including any business or personal 

information provided. Comments 

received, including attachments and 

other supporting materials, are part of 

the public record and subject to public 

disclosure. Do not enclose any 

information in your comment or 

supporting materials that you consider 

confidential or inappropriate for public 

disclosure. 

FOR FURTHER INFORMATION CONTACT: Bill 

Brushwood, Financial Program 

Specialist, at (202) 874–1251 or 

bill.brushwood@fms.treas.gov; or 

Natalie H. Diana, Senior Counsel, at 

(202) 874–6680 or 

natalie.diana@fms.treas.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Title 31 CFR part 210 (Part 210) 

governs the use of the ACH Network by 

Federal agencies. The ACH Network is 

a nationwide electronic fund transfer 

(EFT) system that provides for the interbank clearing of electronic credit and 

debit transactions and for the exchange 

of payment related information among 

participating financial institutions. Part 

210 incorporates the ACH Rules 

adopted by NACHA, with certain 

exceptions. From time to time we 

amend part 210 in order to address 

changes that NACHA periodically 

makes to the ACH Rules or to revise the 

regulation as otherwise appropriate. 

We are proposing to amend part 210 

to address changes that NACHA has 

made to the ACH Rules since the 

publication of the 2005 ACH Rules. We 

are publishing this proposed rule in 

order to indicate which amendments to 

the ACH Rules we are planning to 

accept and which amendments we are 

planning to reject. We are requesting 

comment on the proposed amendments. 

We are also proposing to amend part 

210 to codify a waiver allowing for split 

disbursements of Federal employee 

travel payments. Currently, section 

210.5 requires that an ACH credit entry 

representing a Federal payment to a 

payee (other than a vendor payment) be 

deposited into a deposit account at a 

financial institution in the name of the 

recipient. On August 5, 2005, the Office 

of Management and Budget (OMB) 

revised Circular No. A–123 

(Management’s Responsibility for 

Internal Control). This revision became 

effective in fiscal year 2006 (October 1, 

2005). OMB Circular No. A–123, 

Appendix B (Improving the 

Management of Government Charge 

Card Programs), sec. 4.4 requires, as a 

general matter, that Federal executive 

branch agencies implement split 

disbursement when reimbursing 

employees for official travel charges. 

This requirement applies when the 

individual cardholder is responsible for 

making payment to the charge card 

vendor, i.e., the travel card issuing bank. 

Split disbursement ‘‘is the process of 

dividing a travel voucher 

reimbursement between the charge card 

vendor and traveler.’’ OMB Circular No. 

A–123, Appendix B, sec. 4.4.1. Under 

split disbursement, the ‘‘balance owed 

to each is sent directly to the 

appropriate party.’’ Id. 

In April 2005, the Department of the 

Treasury, under the authority of 31 CFR 

210.5(b)(3), waived the section 210.5 

requirement that an ACH entry be 

deposited into a deposit account at a 

financial institution in the name of the 

recipient for purposes of permitting 

split disbursement. This was necessary 

in order to implement OMB’s split 

disbursement policy since an account 


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1 In an ARC or POP transaction, the Receiver is 

the person or entity making the payment (i.e., the 

remitter or payor) by presenting the check that is 

converted to an ACH debit. 

2 In an ARC or POP transaction, the Originator is 

the person or entity originating the debit entry to 

the account of the payor by accepting the payor’s 

check and converting it to an ACH debit. 

3 In 2007, NACHA adopted a rule change to 

implement a new application for converting checks 

received at points-of-purchase and manned bill 

payment locations to ACH debit entries in a backoffice environment (see discussion below). As with 

POP and ARC, Receivers may opt out of back-office 

conversion by utilizing checks that include an 

identifier within the Auxiliary On-Us Field within 

the MICR line. 

maintained by the travel card issuing 

bank in the name of an employee is not 

a deposit account at a financial 

institution within the meaning of 

section 210.5. We are proposing to 

amend section 210.5 to codify the terms 

of the split disbursement waiver into the 

rule. 

The waiver issued by the Department 

of the Treasury in april 2005 also 

waived the sister deposit account 

regulation codified at 31 CFR part 208 

(Management of Federal Agency 

Disbursements). We will issue a 

separate Notice of Proposed Rulemaking 

in the Federal Register for the purpose 

of amending Part 208 to codify the terms 

of the split disbursement waiver into 

that rule as well. 

The government’s disbursing officials 

disburse travel reimbursement 

payments, including split 

disbursements, in accordance with the 

terms of payment certification vouchers 

submitted by executive branch Federal 

agencies. See 31 U.S.C. 3325 (providing 

that disbursing officials shall ‘‘disburse 

money only as provided by a voucher 

certified’’ by a Federal executive 

agency) and 31 U.S.C. 3528 (setting 

forth certification voucher 

requirements). The proposed rule will 

permit disbursing officials to use the 

ACH system to disburse split 

disbursement payments to the travel 

card issuing bank’s account for credit to 

the employee, as directed by Federal 

certifying agencies. As such, the 

primary purpose of the proposed rule is 

to facilitate the continued 

implementation of the OMB guidance 

mandating split disbursement. 

From a general cash management 

perspective, the Service supports split 

disbursement because it may benefit 

Federal agencies by reducing the 

number of travel card delinquencies. 

Split disbursement may also benefit 

Federal employee travelers by 

facilitating payment of their travel card 

liabilities (although employees remain 

responsible for having their accounts 

current). 

The proposed rule is not intended to, 

and would not, establish or amend 

substantive Federal regulations or 

policies pertaining to Federal employee 

travel or reimbursement for official 

travel expenses. Such regulations and 

policies are established by, among other 

authorities, the Federal Travel 

Regulation (FTR), 41 CFR parts 300–

304. The FTR is within the purview of 

the General Services Administration 

(GSA). GSA issued GSA Bulletin FTR 

05–08 on December 2, 2005, which 

advised Federal agencies of OMB 

Circular No. A–123 requirements, 

including the requirement for split 

disbursement. 

In addition to amending section 210.5 

to allow for split disbursement, we are 

proposing to amend section 210.5 to 

provide that where a Federal payment is 

to be disbursed through a debit card, 

stored value card, prepaid card or 

similar payment card program 

established by the Service, the Federal 

payment may be deposited to an 

account at a financial institution 

designated a financial or fiscal agent, 

and the Service may specify the title, 

access terms and other provisions 

governing the account. The requirement 

that an account to which Federal 

payments are delivered be a deposit 

account in the name of the recipient is 

designed to ensure that a payment 

reaches the intended recipient. In some 

cases in which the Service directs its 

financial or fiscal agent banks to set up 

a card program to facilitate the delivery 

of Federal payments, the most effective 

approach may be to utilize an account 

in which each card holder’s interest is 

recorded, but each individual’s name is 

not included in the account title. In 

these programs, the Service can ensure 

that the beneficial interests of Federal 

payment recipients are protected 

because the Service controls the terms 

and conditions of the programs. The 

section 210.5 requirements serve little 

purpose in this context, and add to the 

complexity of operating these programs. 

We are therefore proposing to adopt an 

exception to section 210.5 which would 

provide the Service with greater 

flexibility in setting up payment card 

programs. 

II. Summary of Rule Changes 

Since we last addressed changes to 

the ACH Rules in 2005, NACHA has 

published two sets of changes to the 

ACH Rules. The first set of changes was 

published in NACHA’s 2006 ACH Rules 

book and a subsequent set of changes 

was published in NACHA’s 2007 ACH 

Rules book. We are proposing to adopt 

all of the changes set forth in the 2006 

and 2007 ACH Rules books except those 

relating to the self-audit provisions of 

the ACH Rules, which we have 

previously determined not to 

incorporate in part 210. The rule 

changes that we are proposing to adopt 

consist primarily of modifications to the 

ACH Rules that have a minimal impact 

on participants in the ACH Network and 

that we believe will not significantly 

affect Federal agencies’ use of the ACH 

Network. However, there are a few rule 

changes that could have a significant 

impact on the Federal government’s use 

of the ACH Network. 

A. Changes to ACH Rules Published in 

2006 ACH Rules Book 

The changes published in the 2006 

ACH Rules book include a number of 

minor operational efficiency and return 

issues changes, and a more significant 

rules change related to the identification 

of business checks ineligible for 

conversion to ACH entries for Accounts 

Receivable (ARC) entries and Point-ofPurchase (POP) entries. The more 

significant rule change amended the 

ACH Rules to enable Receivers 1 to 

identify business checks that are not to 

be converted to ARC or POP entries. For 

ARC entries, the rule change allows a 

Receiver to notify the Originator 2

directly that the Receiver’s checks are 

not to be converted, or to utilize checks 

that include an identifier within the 

Auxiliary On-Us Field within the MICR 

line. For POP entries, Receivers may opt 

out either by utilizing checks that 

include an identifier within the 

Auxiliary On-Us Field within the MICR 

line, or by refusing to sign the required 

written authorization. 

Part 210 allows agencies to convert 

business checks at points-of-purchase 

and lockboxes by using the Corporate 

Credit or Debit (CCD) entry format. 

However, the great majority of checks 

converted by agencies are consumer 

checks, and in 2004 we indicated that 

as we continued to implement check 

conversion we would not convert 

business checks at new over-the-counter 

or lockbox locations. NACHA’s rule 

change provides a way for agencies to 

clearly identify, in an automated 

fashion, whether a business check is 

ineligible for conversion to an ARC or 

POP entry.3 We believe the rule change 

solves a problem that the ACH rules 

previously presented for agencies: how 

to identify business checks that are 

ineligible for conversion that are 

received in collection streams. Because 

NACHA’s rule change eliminates the 

need to address the conversion of 

business checks in part 210, we are 

proposing to delete those provisions 

from the regulation. The proposed rule 


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change does not mean that we intend to 

begin converting all eligible business 

checks to ACH entries. Rather, the 

proposed rule change allows for greater 

flexibility in determining the most 

advantageous way for the government to 

handle business checks. Thus, we may 

continue to process business checks by 

using image presentment or presenting 

the original items, as appropriate, but 

we will also have the option of 

converting eligible business checks in 

situations where it is more efficient and 

cost-effective to do so. 

The minor rule changes published in 

the 2006 Rules book include: 

• Changes related to the Company 

Name Field definition for ARC entries; 

• A requirement for the Originating 

Depository Financial Institution (ODFI) 

to enter into a contractual relationship 

with Third-Party Senders; 

• Removal of redundant language 

regarding use of encryption technology 

for Internet-initiated (WEB) entries; 

• Inclusion of language with respect 

to an ODFI’s liability for breach of 

specific Telephone-initiated (TEL) 

warranties; 

• Addition of definitions for 

Automated Accounting Advice (ADV) 

and Notification or Change (COR) 

entries; 

• Minor modifications of definitions 

associated with various Return Reason 

codes; and 

• Consolidation of Dishonored Return 

Reason codes. 

We are proposing to adopt all the 

foregoing rule changes, which we 

believe improve the operation of the 

ACH Network and the clarity of the 

ACH Rules. 

B. Changes to ACH Rules Published in 

2007 ACH Rules Book 

The rule changes published in 

NACHA’s 2007 Rules book involve a 

number of changes that have a minimal 

impact on ACH Network participants, as 

well as three rule amendments with a 

significant impact either on the private 

sector or on Federal agencies. Those 

three amendments are: Changes to 

NACHA’s voting and funding 

requirements; changes to the 

requirements for ARC entries and POP 

entries; and changes to implement a 

new application for converting checks 

received at points-of-purchase and 

manned bill payment locations to ACH 

debit entries in a back-office 

environment. 

Voting and Funding Requirements 

Effective January 1, 2007, NACHA 

amended the ACH Rules to provide for 

the assessment of new Network 

administration fees to cover the costs 

related to management of the ACH 

Network. These fees include a per-entry 

fee for each commercial, inter-bank or 

Federal Government entry transmitted 

or received by the participating 

Depository Financial Institution (DFI). 

The amount of the transaction fee will 

be established from time to time by the 

NACHA Board of Directors based on 

projected costs and volumes. For 

calendar year 2007, the per-entry fee is 

$.0001. In addition to providing for fees, 

NACHA also modified the procedures 

for the amendment of the ACH Rules to 

clarify the specific allocation of votes 

required for approval of an amendment 

by the voting membership. 

We support this rule change because 

of its importance in providing for the 

long term funding of NACHA’s Network 

management activities, including risk 

management and the advancement of 

rules supporting the ability of entities to 

convert check payments received into 

ACH entries. The Service will pay these 

fees on behalf of agencies for which we 

disburse and collect payments. 

ARC and POP Entries 

NACHA has amended its check 

conversion rules to keep the rules in 

sync with Regulation E (12 CFR part 

205) and its associated commentary, 

which the Federal Reserve revised by 

amendments effective January 1, 2007. 

NACHA’s rule changes ensure that the 

ACH Rules are consistent with the 

mandatory changes required by 

Regulation E by making corresponding 

changes to the electronic check 

applications supported by the ACH 

Rules. Specifically, NACHA’s 

amendment (1) modifies the ACH Rules 

with respect to the notice requirement 

for ARC entries, and (2) incorporates a 

notice obligation into the authorization 

requirements for POP Entries. This 

amendment also includes other minor 

revisions to the ACH Rules to clarify 

that (1) an ARC source document may 

not be presented for payment unless the 

ARC entry is returned by the Receiving 

Depository Financial Institution (RDFI); 

(2) ARC entries for which the Receiver 

opted out of check conversion constitute 

a valid reason for recredit to the 

Receiver and return by the RDFI; and (3) 

a POP entry is considered to be 

unauthorized if the requirements for 

both written authorization and notice 

were not met. In addition, effective 

March 16, 2007, the requirement that 

ARC source documents be destroyed 

within 14 days of the settlement of the 

entry has been deleted. A new rule has 

been added to provide that Originators 

must use commercially reasonable 

methods to securely store all source 

documents until destruction, as well as 

all banking information relating to ARC 

entries. Finally, NACHA (1) modified 

the ARC and POP rules governing 

requirements for MICR capture of source 

document information, and (2) made 

corresponding modifications/additions 

to the audit requirements regarding 

MICR capture obligations for ARC and 

POP entries to ensure consistency of 

wording among various electronic check 

applications. 

The ACH rule changes incorporate 

Regulation E safe harbor language for 

the notice required to be provided to 

Receivers whose checks are converted 

using ARC entries. Under the newly 

revised ACH Rules, agencies would be 

required to use the following language, 

or language that is substantially similar, 

for their notices. 

‘‘When you provide a check as payment, 

you authorize us either to use information 

from your check to make a one-time 

electronic fund transfer from your account or 

to process the payment as a check 

transaction.’’

Until January 1, 2010, the following, or 

substantially similar, additional 

language must also be included: ‘‘When 

we use information from your check to 

make an electronic fund transfer, funds 

may be withdrawn from your account as 

soon as the same day we receive your 

payment, and you will not receive your 

check back from your financial 

institution.’’

The new ACH Rule changes provide 

that an Originator may convert a check 

presented at a point-of-purchase, 

provided that a required notice is posted 

in a prominent and conspicuous 

location, and that a copy of the notice 

is provided to the Receiver at the time 

of the transaction. The notice and copy 

of the notice must include the following 

or substantially similar language: 

‘‘When you provide a check as payment, 

your authorized us either to use the 

information from your check to make a onetime electronic fund transfer from your 

account or to process the payment as a check 

transaction.’’

Until January 1, 2010, the following or 

substantially similar additional 

language must be included in the notice: 

‘‘When we use information from your 

check to make an electronic fund 

transfer, funds may be withdrawn from 

your account as soon as the same day 

you make your payment.’’

Agencies are currently required by 

part 210 to use specifically worded 

disclosures for POP and ARC check 

conversion. Those disclosures, which 

are set out in Appendices A, B, and C 

to part 210, are substantially similar to 

(but much longer than) the foregoing 

POP and ARC required notices. We are 


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proposing to delete Appendices A, B, 

and C from part 210, which would mean 

that agencies could either continue to 

use the same disclosures they are 

currently using or, alternatively, begin 

using the shorter disclosures now 

required under the ACH Rules. 

Back Office Conversion Entries 

Effective March 16, 2007, NACHA 

established a new electronic check 

conversion application, Back Office 

Conversion (BOC) entries, that will 

allow retailers and billers to accept 

checks at the point-of-purchase or at 

manned bill payment locations and 

convert the checks to ACH debits during 

back office processing. In order to use a 

check to originate a BOC entry, the 

Originator must post a notice in a 

prominent and conspicuous location 

that states: ‘‘When you provide a check 

as payment, you authorize us either to 

use the information from your check to 

make a one-time electronic fund transfer 

from your account or to process the 

payment as a check transaction. For 

inquiries, please call [retailer phone 

number].’’ Until January 1, 2010, the 

posted notice must also state: ‘‘When we 

use information from your check to 

make an electronic fund transfer, funds 

may be withdrawn from your account as 

soon as the same day you make your 

payment, and you will not receive your 

check back from your financial 

institution.’’ A copy of the notice, or 

language that is substantially similar, 

must be provided to the Receiver at the 

time of the transaction. In addition, the 

Originator must provide the Receiver 

the ability to opt out of the conversion 

of his check to an ACH debit entry. To 

opt out, the Receiver must notify the 

Originator at the time of purchase that 

a particular check does not authorize an 

ACH debit entry. 

We are proposing to adopt most of the 

ACH rule changes implementing the 

BOC application. In 2003, we amended 

part 210 to allow agencies to convert 

checks to ARC entries in certain 

circumstances that fall outside typical 

accounts receivable and point-ofpurchase settings. Our rule enabled 

Federal agencies to convert checks in 

circumstances in which check 

conversion would not have been 

possible under NACHA’s then-existing 

ARC and POP rules. For example, when 

Army pay officers travel to remote, offbase locations in order to cash checks 

for soldiers, pay officers cannot bring 

along the necessary equipment to scan 

and return voided checks, as is required 

by the ACH rules governing POP entries. 

Nor could these checks be converted to 

ARC entries under ACH rules, because 

a pay officer’s acceptance of checks in 

these circumstances does not constitute 

an accounts receivable (lockbox) setting. 

To provide for the conversion of checks 

in a variety of circumstances falling 

outside typical accounts receivable and 

point-of-purchase settings, we adopted 

in part 210 a provision to allow agencies 

to convert checks delivered in person in 

circumstances in which an agency 

cannot contemporaneously image and 

return the check. 

Because the BOC application 

addresses the Government’s need for 

flexibility in these situations, there is no 

longer a need to retain this provision in 

Part 210. Instead, agencies can now 

convert these checks using the BOC 

application. We therefore propose to 

adopt the rule changes implementing 

the BOC application, with the exception 

of the audit requirements associated 

with the BOC entry type as reflected 

within Appendix Eight (Rule 

Compliance Audit Requirements), 

Sections 8.2 and 8.3 of the ACH Rules. 

We are proposing not to adopt the audit 

requirements, consistent with our 

previous position exempting Federal 

agencies from the requirements of ACH 

Rules associated with enforcement of 

the ACH Rules (Appendix Eight and 

Appendix Eleven). 

Treasury needs to make the 

programming and operational changes 

necessary to implement the BOC 

application. Accordingly, we expect that 

for some period of time after the 

adoption of a final rule, it will be 

necessary to continue our existing 

process of converting items to ARC 

entries in circumstances other than 

typical lockbox and point-of-purchase 

settings. 

Rules With a Minor Impact on the ACH 

Network 

NACHA published in the 2007 Rules 

book the following amendments that 

have a minor impact on the ACH 

Network: 

• Description of Corrected Data 

Within Contested Dishonored Return 

Reason Code R74—Previously, the 

description of Return Reason Code R74 

(Corrected Return), related to the 

correction of the Individual 

Identification Number/Identification 

Number Field within the Entry Detail 

Record, did not reflect all applicable 

SEC Codes that contain these fields. 

This amendment modified the 

description of Return Reason Code R74 

within Appendix Five, Section 5.4 

(Table of Return Reason Codes), as it 

relates to the Individual Identification 

Number/Identification Number, to add 

the following additional SEC Codes to 

be consistent with current industry 

practice; CBR, CTX, DNE, ENR, PBR, 

TEL, TRX, and WEB. 

• Direct Financial Institution and 

Payment Association Definitions—The 

Terms ‘‘Direct Financial Institution’’

and ‘‘Payment Association’’ were 

referenced within the procedures for 

amendment of the ACH Rules in Article 

Thirteen but not defined within the 

ACH Rules. This amendment added 

definitions for these terms to Article 

Fourteen (Definition of Terms) of the 

ACH Rules. 

• Time Frame to Re-initiate Entries—

Previously, the ACH Rules defined 

under what conditions an ACH entry 

that is returned may be re-initiated, but 

did not prescribe any limitations on the 

time period within which such reinitation must occur. To preclude 

attempts to re-initiate extremely stale 

entries, NACHA amended the rules to 

establish the period of time after which 

returned entries cannot be re-initiated. 

Specifically, an entry may not be reinitiated more than 180 days after the 

settlement date of the original 

transaction. 

• Available ACH Characters—This 

amendment modified the definition of 

‘‘alphameric’’ within Article Fourteen 

and the data specification requirements 

within Appendix One to clarify that 

lowercase alpha characters are 

permitted within ACH entries, except 

where explicitly noted otherwise. 

• Name and Definition of Cash 

Concentration or Disbursement (CCD) 

Standard Entry Class Code—This 

amendment modified the name and 

description of the CCD format to clarify 

that CCD entries can be used more 

broadly than just for intra-corporate 

payments. The name of the CCD format 

was changed from ‘‘Cash Concentration 

or Disbursement’’ to ‘‘Corporate Credit 

or Debit’’ and the description was 

revised to indicate that this code may 

also be used for a transfer of funds from 

the account of one organization to the 

account of another organization. 

• Formatting Requirements for TEL 

(Telephone-Initiated) and WEB 

(Internet-Initiated) Entries—This 

amendment redefined the Individual 

Name Field within the Entry Detail 

Record of both TEL and WEB entries 

(and related returns) from Required to 

Mandatory to facilitate ACH Operators’

use of various risk filters to monitor the 

field for possible fraudulent content. 

Operator edits within Appendix Three, 

as they relate to Return Reason Code 

R26 (Mandatory Field Error), were also 

modified to permit the return of any 

TEL or WEB entry within which this 

field contains all spaces or all zeros. 

• Additional Addenda Code for 

Dishonored Return Reason Code R69—


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1564 Federal Register / Vol. 73, No. 6 / Wednesday, January 9, 2008 / Proposed Rules 

This amendment added, under the 

description of Return Reason Code R69 

(Field Errors), an additional criterion 

under which an entry containing 

incorrect information may be 

dishonored. This change enables an 

ODFI to dishonor a return if the original 

Effective Entry Date was incorrectly 

copied from the forward entry. 

We support the foregoing ACH Rules 

changes. The changes clarify certain 

ACH Rules that were previously unclear 

or ambiguous, and provide greater 

flexibility and operational efficiency for 

users of the ACH Network. We believe 

these changes are beneficial and 

propose to incorporate them into part 

210. 

III. Section-by-Section Analysis 

In order to incorporate in part 210 the 

ACH rule changes that we are accepting, 

the only change necessary to the current 

regulation is to replace references to the 

2005 Rules book with references to the 

2007 ACH Rules book. No change to 

part 210 is necessary in order to exclude 

the amendments to the audit provisions, 

since part 210 already provides that the 

ACH audit requirements do not apply to 

Federal agency ACH transactions. 

Section 210.2(d) 

We are proposing to amend the 

definition of applicable ACH Rules at 

§ 210.2(d) to reference the rules 

published in NACHA’s 2007 Rules book 

rather than the rules published in 

NACHA’s 2005 Rules book. 

Section 210.3(b) 

We are proposing to amend § 210.3(b) 

by replacing the references to the ACH 

Rules as published in the 2005 Rules 

book with references to the ACH Rules 

as published in the 2007 Rules book. 

Section 210.5 

We are proposing to amend § 210.5(b) 

by adding a new paragraph (b)(3) to 

allow for the issuance of part or all of 

a Federal employee’s travel 

reimbursement to the employee’s travel 

card account at the card issuing bank. 

We are also proposing to add a new 

paragraph (b)(4), which would provide 

that where a Federal payment is to be 

disbursed through a debit card, stored 

value card, prepaid card or similar 

payment card program established by 

the Service, the Federal payment may be 

deposited to an account at a financial 

institution designated as a financial or 

fiscal agent. The Service may specify the 

account title, access terms, and other 

account provisions, and thereby protect 

the interest of payment recipients. This 

paragraph would apply in those cases 

when the Service directs its financial or 

fiscal agent bank to set up a card 

program. 

Section 210.6(g) 

We are proposing to revise current 

§ 210.6(g) to reflect the revision of the 

ACH Rules governing POP entries. We 

believe that, as revised, the ACH Rules 

governing POP entries are appropriate 

in most respects for agencies. Unlike the 

ACH Rules, however, part 210 will 

continue to allow agencies to originate 

POP entries without a written 

authorization, as long as the notice 

required by the ACH Rules is posted 

and the Receiver is provided with a 

copy of the notice. This approach is 

consistent with the authorization 

requirements of Regulation E. 

Section 210.6(h) 

We are proposing to delete the text of 

current § 210.6(h). We believe that, as 

revised, the ACH Rules governing 

accounts receivable check conversion 

are appropriate for agencies, and 

therefore, a separate rule within part 

210 is no longer necessary. We are 

proposing to revise the text of current 

§ 210.6(i) and renumber it as § 210.6(h). 

The revision would clarify that in order 

to debit a Receiver’s account for an 

insufficient funds service fee, the 

agency must have independent 

authority to collect fees for items 

returned due to insufficient funds. An 

agency that has such authority may 

originate an ACH debit entry to collect 

a one-time service fee in connection 

with an ARC, POP or BOC entry that is 

returned due to insufficient funds, 

provided that the agency discloses the 

service fee in the notices required for 

the ARC, POP or BOC entry. The 

required disclosure is unchanged, but 

has been relocated from Appendices A, 

B, and C, which we are proposing to 

remove from the regulation. 

IV. Procedural Requirements 

Request for Comment on Plain Language 

Executive Order 12866 requires each 

agency in the Executive branch to write 

regulations that are simple and easy to 

understand. We invite comment on how 

to make the proposed rule clearer. For 

example, you may wish to discuss: (1) 

Whether we have organized the material 

to suit your needs; (2) whether the 

requirements of the rules are clear; or (3) 

whether there is something else we 

could do to make these rules easier to 

understand. 

Regulatory Planning and Review 

The proposed rule does not meet the 

criteria for a ‘‘significant regulatory 

action’’ as defined in Executive Order 

12866. Therefore, the regulatory review 

procedures contained therein do not 

apply. 

Regulatory Flexibility Act Analysis 

It is hereby certified that the proposed 

rule will not have a significant 

economic impact on a substantial 

number of small entities. The proposed 

changes to the regulation related to 

ARC, POP, and BOC check conversion 

will not result in significant costs for 

individuals or financial institutions 

affected by the changes, including 

financial institutions that are small 

entities. New ACH fees will be borne by 

the government, and will not affect 

other parties sending or receiving 

Federal ACH transactions, including 

small entities. Accordingly, a regulatory 

flexibility analysis under the Regulatory 

Flexibility Act (5 U.S.C. 601 et seq.) is 

not required. 

Unfunded Mandates Act of 1995 

Section 202 of the Unfunded 

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

1532 (Unfunded Mandates Act), 

requires that the agency prepare a 

budgetary impact statement before 

promulgating any rule likely to result in 

a Federal mandate that may result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year. If a budgetary impact 

statement is required, section 205 of the 

Unfunded Mandates Act also requires 

the agency to identify and consider a 

reasonable number of regulatory 

alternatives before promulgating the 

rule. We have determined that the 

proposed rule will not result in 

expenditures by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year. Accordingly, we have 

not prepared a budgetary impact 

statement or specifically addressed any 

regulatory alternatives. 

List of Subjects in 31 CFR Part 210 

Automated Clearing House, Electronic 

funds transfer, Financial institutions, 

Fraud, and Incorporation by reference. 

Words of Issuance 

For the reasons set out in the 

preamble, we propose to amend 31 CFR 

part 210 as follows: 

PART 210—FEDERAL GOVERNMENT 

PARTICIPATION IN THE AUTOMATED 

CLEARING HOUSE 

1. The authority citation for part 210 

continues to read as follows: 

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

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

3720. 


rwilkins on PROD1PC63 with PROPOSALS-1
Federal Register / Vol. 73, No. 6 / Wednesday, January 9, 2008 / Proposed Rules 1565 

2. Revise § 210.2(d) to read as follows: 

§ 210.2 Definitions. 

* * * * * 

(d) Applicable ACH Rules means the 

ACH Rules with an effective date on or 

before September 21, 2007, as published 

in Parts II, III and VI of the ‘‘2007 ACH 

Rules: A Complete Guide to Rules & 

Regulations Governing the ACH 

Network’’ except: 

(1) ACH Rule 1.1 (limiting the 

applicability of the ACH Rules to 

members of an ACH association); 

(2) ACH Rule 1.2.2 (governing claims 

for compensation); 

(3) ACH Rules 1.2.4 and 2.2.1.12; 

Appendix Eight; and Appendix Eleven 

(governing the enforcement of the ACH 

Rules, including self-audit 

requirements); 

(4) ACH Rules 2.2.1.10; 2.6; and 4.8 

(governing the reclamation of benefit 

payments); 

(5) ACH Rule 9.3 and Appendix Two 

(requiring that a credit entry be 

originated no more than two banking 

days before the settlement date of the 

entry—see definition ‘‘Effective Entry 

Date’’ in Appendix Two); 

(6) ACH Rule 2.11.2.3 (requiring that 

originating depository financial 

institutions (ODFIs) establish exposure 

limits for Originators of Internetinitiated debit entries); and 

(7) ACH Rule 2.13.3 (requiring 

reporting regarding unauthorized 

Telephone-initiated entries). 

* * * * * 

3. Revise § 210.3(b) to read as follows: 

§ 210.3 Governing law. 

* * * * * 

(b) Incorporation by reference— 

applicable ACH Rules. 

(1) This part incorporates by reference 

the applicable ACH Rules, including 

rule changes with an effective date on 

or before September 21, 2007, as 

published in parts II, III, and VI of the 

‘‘2007 ACH Rules: A Complete Guide to 

Rules & Regulations Governing the ACH 

Network.’’ The Director of the Federal 

Register approves this incorporation by 

reference in accordance with 5 U.S.C. 

552(a) and 1 CFR part 51. Copies of the 

‘‘2007 ACH Rules’’ are available from 

NACHA—The Electronic Payments 

Association, 13450 Sunrise Valley 

Drive, Suite 100, Herndon, Virginia 

20171. Copies also are available for 

public inspection at the Office of the 

Federal Register, 800 North Capital 

Street, NW., Suite 700, Washington, DC 

20002; and the Financial Management 

Service, 401 14th Street, SW., Room 

400A, Washington, DC 20227. 

(2) Any amendment to the applicable 

ACH Rules that is approved by 

NACHA—The Electronic Payments 

Association after January 1, 2007 shall 

not apply to Government entries unless 

the Service expressly accepts such 

amendment by publishing notice of 

acceptance of the amendment to this 

part in the Federal Register. An 

amendment to the ACH Rules that is 

accepted by the Service shall apply to 

Government entries on the effective date 

of the rulemaking specified by the 

Service in the Federal Register notice 

expressly accepting such amendment. 

* * * * * 

4. Redesignate paragraph § 210.5(b)(3) 

as § 210.5(b)(5) and add new paragraphs 

(b)(3) and (b)(4) to read as follows: 

§ 210.5 Account requirements for Federal 

payments. 

* * * * * 

(b) * * * 

(3) Where an agency is issuing part or 

all of an employee’s travel 

reimbursement payment to the official 

travel card issuing bank, as authorized 

or required by Office of Management 

and Budget guidance or the Federal 

Travel Regulation, the ACH credit entry 

representing the payment may be 

deposited to the account of the travel 

card issuing bank for credit to the 

employee’s travel card account at the 

bank. 

(4) Where a Federal payment is to be 

disbursed through a debit card, stored 

value card, prepaid card or similar 

payment card program established by 

the Service, the Federal payment may be 

deposited to an account at a financial 

institution designated by the Service as 

a financial or fiscal agent. The account 

title, access terms and other account 

provisions may be specified by the 

Service. 

6. In § 210.6, revise paragraphs (g) and 

(h) to read as follows, and remove 

paragraph (i): 

§ 210.6 Agencies. 

* * * * * 

(g) Point-of-purchase debit entries. An 

agency may originate a Point-ofPurchase (POP) entry using a check 

drawn on a consumer or business 

account and presented at a point-ofpurchase unless the Receiver opts out in 

accordance with the ACH Rules. The 

requirements of ACH Rules 2.1.2 and 

3.12 shall be met for such an entry if the 

Receiver presents the check at a location 

where the agency has posted the notice 

required by the ACH Rules and has 

provided the Receiver with a copy of the 

notice. 

(h) Returned item service fee. An 

agency that has authority to collect 

returned item service fees may do so by 

originating an ACH debit entry to collect 

a one-time service fee in connection 

with an ARC, POP or BOC entry that is 

returned due to insufficient funds. An 

entry originated pursuant to this 

paragraph shall meet the requirements 

of ACH Rules 2.1.2 and 3.5 if the agency 

includes the following statement in the 

required notice(s) to the Receiver: ‘‘If 

the electronic fund transfer cannot be 

completed because there are insufficient 

funds in your account, we may impose 

a one-time fee of $[llll] against 

your account, which we will also collect 

by electronic fund transfer.’’

Appendices A, B and C [Removed] 

7. Remove Appendices A, B and C 

from this part. 

Dated: December 27, 2007. 

Kenneth R. Papaj, 

Commissioner. 

[FR Doc. 08–22 Filed 1–8–08; 8:45 am] 

BILLING CODE 4810–35–M 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 117 

[USCG–2007–0043] 

RIN 1625–AA09 

Drawbridge Operation Regulations; 

Arkansas Waterway, Little Rock, AR 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Coast Guard proposes an 

amendment to the regulation for the 

operation of the Baring Cross Railroad 

Drawbridge across the Arkansas 

Waterway at Mile 119.6 at Little Rock, 

Arkansas. The revised regulation would 

accurately depict where the drawbridge 

operator is located and that the bridge, 

which is remotely operated, is equipped 

with a Photoelectric Boat Detection 

System. 

DATES: Comments and related material 

must reach the Coast Guard on or before 

March 10, 2008. 

ADDRESSES: You may submit comments 

identified by Coast Guard docket 

number USCG–2007–0043 to the Docket 

Management Facility at the U.S. 

Department of Transportation. To avoid 

duplication, please use only one of the 

following methods: 

(1) Online: http:// 

www.regulations.gov. 

(2) Mail: Docket Management Facility 

(M–30), U.S. Department of 

Transportation, West Building Ground 

Floor, Room W12–140, 1200 New Jersey 


rwilkins on PROD1PC63 with PROPOSALS-1