52578 Federal Register / Vol. 73, No. 176 / Wednesday, September 10, 2008 / Rules and Regulations 

governor of the state in which the 

airport is located approves the 

designation. Generally, the type of 

airport that would seek designation as a 

user fee airport would be one at which 

a company, such as an air courier 

service, has a specialized interest in 

regularly landing. 

As the volume of business anticipated 

at this type of airport is insufficient to 

justify its designation as an 

international or landing rights airport, 

the availability of customs services is 

not paid for out of appropriations from 

the general treasury of the United States. 

Instead, customs services are provided 

on a fully reimbursable basis to be paid 

for by the user fee airport on behalf of 

the recipients of the services. 

The fees which are to be charged at 

user fee airports, according to the 

statute, shall be paid by each person 

using the customs services at the airport 

and shall be in the amount equal to the 

expenses incurred by the Commissioner 

of CBP in providing customs services 

which are rendered to such person at 

such airport, including the salary and 

expenses of those employed by the 

Commissioner of CBP to provide the 

customs services. To implement this 

provision, generally, the airport seeking 

the designation as a user fee airport or 

that airport’s authority agrees to pay a 

flat fee for which the users of the airport 

are to reimburse the airport/airport 

authority. The airport/airport authority 

agrees to set and periodically review the 

charges to ensure that they are in accord 

with the airport’s expenses. 

The Commissioner of CBP designates 

airports as user fee airports pursuant to 

19 U.S.C. 58b. See 19 CFR 122.15. If the 

Commissioner decides that the 

conditions for designation as a user fee 

airport are satisfied, a Memorandum of 

Agreement (MOA) is executed between 

the Commissioner of CBP and the local 

responsible official signing on behalf of 

the state, city or municipality in which 

the airport is located. In this manner, 

user fee airports are designated on a 

case-by-case basis. Section 19 CFR 

122.15 sets forth the grounds for 

withdrawal of a user fee designation and 

sets forth the list of designated user fee 

airports. Periodically, CBP updates the 

list of user fee airports at 19 CFR 

122.15(b) to reflect those that have been 

currently designated by the 

Commissioner. This document updates 

that list of user fee airports by adding 

Valley International Airport, in 

Harlingen, Texas to the list. On May 28, 

2008, the Commissioner signed an MOA 

approving the designation of user fee 

status for Valley International Airport. 

Inapplicability of Public Notice and 

Delayed Effective Date Requirements 

Because this amendment merely 

updates the list of user fee airports to 

include an airport already designated by 

the Commissioner of CBP in accordance 

with 19 U.S.C. 58b and neither imposes 

additional burdens on, nor takes away 

any existing rights or privileges from, 

the public, pursuant to 5 U.S.C. 

553(b)(B), notice and public procedure 

are unnecessary, and for the same 

reasons, pursuant to 5 U.S.C. 553(d)(3), 

a delayed effective date is not required. 

The Regulatory Flexibility Act and 

Executive Order 12866 

Because no notice of proposed 

rulemaking is required, the provisions 

of the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) do not apply. This 

amendment does not meet the criteria 

for a ‘‘significant regulatory action’’ as 

specified in Executive Order 12866. 

Signing Authority 

This document is limited to a 

technical correction of CBP regulations. 

Accordingly, it is being signed under 

the authority of 19 CFR 0.1(b). 

List of Subjects in 19 CFR Part 122 

Air carriers, Aircraft, Airports, 

Customs duties and inspection, Freight. 

Amendment to Regulations 

■ Part 122, Code of Federal Regulations 

(19 CFR part 122) is amended as set 

forth below: 

PART 122—AIR COMMERCE 

REGULATIONS 

■ 1. The authority citation for part 122 

continues to read as follows: 

Authority: 5 U.S.C. 301; 19 U.S.C. 58b, 66, 

1431, 1433, 1436, 1448, 1459, 1590, 1594, 

1623, 1624, 1644, 1644a, 2071 note. 

■ 2. The listing of user fee airports in 

section 122.15(b) is amended as follows: 

by adding, in alphabetical order, in the 

‘‘Location’’ column ‘‘Harlingen, Texas’’

and by adding on the same line, in the 

‘‘Name’’ column, ‘‘Valley International 

Airport.’’

Dated: September 4, 2008. 

Jason P. Ahern, 

Acting Commissioner, U.S. Customs and 

Border Protection. 

[FR Doc. E8–20990 Filed 9–9–08; 8:45 am] 

BILLING CODE 9111–14–P 

DEPARTMENT OF STATE 

22 CFR Part 122 

[Public Notice 6353] 

Amendment to the International Traffic 

in Arms Regulations: Correction 

AGENCY: Department of State. 

ACTION: Correction of final rule. 

SUMMARY: This document makes a 

correction to the RIN stated in the final 

rule published on July 18, 2008 (73 FR 

41258) pertaining to ‘‘Renewal of 

Registration.’’ RIN 1400–AC50 should 

be RIN 1400–AC51. 

DATES: Effective Date: September 10, 

2008. 

FOR FURTHER INFORMATION CONTACT: 

Mary Sweeney, Office of Defense Trade 

Controls Policy, Bureau of PoliticalMilitary Affairs, Department of State, 

(202) 663–2865. 

SUPPLEMENTARY INFORMATION: The 

Department of State published a final 

rule (Public Notice 6300) in the Federal 

Register of July 18, 2008, amending Part 

122 of the International Traffic in Arms 

Regulations. 

In rule FR Doc. E8–16537 published 

on July 18, 2008 (73 FR 41258), make 

the following correction. 

1. On page 41258, second column, 

‘‘RIN 1400–AC50’’ should read ‘‘RIN 

1400–AC51.’’

Dated: September 4, 2008. 

Robert S. Kovac, 

Managing Director, Directorate of Defense 

Trade Controls, Department of State. 

[FR Doc. E8–21018 Filed 9–9–08; 8:45 am] 

BILLING CODE 4710–25–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: Final rule. 

SUMMARY: We are amending our 

regulation governing the use of the 

Automated Clearing House (ACH) 

system by Federal agencies. The rule 

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 


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Federal Register / Vol. 73, No. 176 / Wednesday, September 10, 2008 / Rules and Regulations 52579 

agencies. We are issuing this rule to 

address changes to the ACH Rules set 

forth in NACHA’s 2006 ACH Rules book 

and 2007 ACH Rules book. We are 

adopting all of the changes that NACHA 

published in the 2006 ACH Rules book 

and 2007 ACH Rules book, except 

certain changes to the self-audit 

provisions of the ACH Rules, which we 

have previously determined are not 

appropriate for the Federal government. 

This rule follows publication of a 

January 9, 2008 proposed rule and 

adopts the provisions of the proposed 

rule without change. 

In addition, the rule provides two 

exceptions to existing deposit account 

requirements. Generally, an ACH credit 

entry representing a Federal payment 

other than a vendor payment must be 

deposited into a deposit account at a 

financial institution in the name of the 

recipient. On April 25, 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 rule codifies this 

waiver. The rule also provides an 

exception from existing deposit account 

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: This rule is effective October 10, 

2008. The incorporation by reference of 

the publication listed in the rule is 

approved by the Director of the Federal 

Register as of October 10, 2008. 

ADDRESSES: You can download this rule 

at the following Web site: http:// 

www.fms.treas.gov/ach. 

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. 

Proposed Rulemaking 

On January 9, 2008, we published a 

notice of proposed rulemaking (NPRM) 

requesting comment on a number of 

proposed amendments to Part 210. 73 

FR 1560. We proposed to amend Part 

210 to address changes to the ACH 

Rules set forth in the 2006 ACH Rules 

book and the 2007 ACH Rules book. We 

also proposed to amend Part 210 to 

codify a waiver allowing for split 

disbursements of Federal employee 

travel payments. In addition, we 

proposed to amend Part 210 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 by the Service to 

operate the program as Treasury’s 

financial or fiscal agent, and the Service 

may specify the title, access terms and 

other provisions governing the account. 

We received two comment letters on 

the NPRM. NACHA submitted a 

comment letter generally supporting the 

amendments. NACHA requested 

clarification that the proposed 

amendments relating to payment card 

programs and split disbursement of 

Federal employee travel 

reimbursements would not impose any 

express or implied requirement on 

financial institutions to match the name 

on the entry to the name on the account. 

As discussed in Section II below, 

neither of these amendments in any way 

affects the right of financial institutions 

to rely on account numbers alone in 

posting entries. 

The Association for Financial 

Professionals (AFP) also commented on 

the NPRM. AFP’s comment letter 

primarily addressed the conversion of 

business checks to ACH debits. AFP 

supported the proposed incorporation of 

the ACH Rules regarding the conversion 

of checks at accounts receivable and 

back office locations. However, AFP 

expressed concern that the proposed 

rule would permit the conversion of 

business checks at points-of-purchase 

without written authorization. AFP 

pointed out that business staff persons 

paying for purchases at points-ofpurchase may not be authorized to make 

decisions about payment methods and 

may not be educated about the need to 

read posted notices. Although the 

Service recognizes that corporate staff 

may not be authorized to make 

decisions about payment methods at a 

point-of-purchase, businesses that do 

not want checks converted at points-ofpurchase can prevent conversion by 

utilizing an identifier within the 

Auxiliary On-Us Field within the MICR 

line of the check. Accordingly, we do 

not believe that the unauthorized 

conversion of corporate checks at 

points-of-purchase is likely to be a 

significant problem. 

Final Rule 

We are adopting, without change, all 

of the changes to Part 210 that were 

proposed in the NPRM. Those changes 

consist of the following: 

• The codification of a waiver 

allowing for split disbursements of 

Federal employee travel payments; 

• The adoption of a provision stating 

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, and the Service may specify 

the title, access terms and other 

provisions governing the account; and 

• The adoption of all changes to the 

ACH Rules set forth in the 2006 ACH 

Rules book and the 2007 ACH Rules 

book, except changes to the self-audit 

rules. 

II. Discussion of Amendments to Part 

210 

Split Travel Reimbursements 

Section 210.5 generally 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 


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1The 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 plan to 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. 

2NACHA has promulgated additional rule 

changes since the publication of the 2007 ACH Rule 

book. We plan to address those changes in a future 

rulemaking. 

3 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. 

4 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. 

5Part 210 does not require written authorization 

for POP entries originated by Federal agencies. 

Consumers who wish to opt out of POP at an agency 

location may do so utilizing checks that include an 

identifier within the Auxiliary On-Us Field within 

the MICR line or by utilizing another payment 

method. 

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 

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 amending section 

210.5 to codify the terms of the split 

disbursement waiver into the rule.1

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 final rule does 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 

chapters 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 its comment letter on the proposed 

rule, NACHA requested clarification 

that the use of split travel disbursements 

by agencies does not affect the right of 

financial institutions to rely on account 

numbers alone in crediting those 

entries. As is the case with any entry 

representing a Federal payment, 

financial institutions may rely on 

account numbers alone when posting 

entries. 

Card Programs Established by the 

Service 

In addition to amending section 210.5 

to allow for split disbursement, we are 

amending 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 by the Service to 

operate the program as Treasury’s 

financial or fiscal agent, and the Service 

may specify the title, access terms and 

other provisions governing the account. 

This provision applies only in those 

cases when the Service directs its 

financial or fiscal agent bank to set up 

a card program. 

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 cardholder’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 adopting an exception to 

section 210.5 which will provide the 

Service with greater flexibility in setting 

up payment card programs. We are also 

confirming, as requested by NACHA in 

its comment letter, that financial 

institutions may rely on account 

numbers alone when posting entries 

representing Federal payments to a card 

account. 

ACH Rule Changes 

Since we last addressed changes to 

the ACH Rules in 2005, NACHA has 

made a number 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.2 We are adopting 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 

adopting 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 

rule 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 3 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 4

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.5

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 


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6 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 in Section II(B)). 

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. 

fashion, whether a business check is 

ineligible for conversion to an ARC or 

POP entry.6 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 

deleting those provisions from the 

regulation. The rule change does not 

mean that we intend to begin converting 

all eligible business checks to ACH 

entries. Rather, the 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 of Change (COR) 

entries; 

• Minor modifications of definitions 

associated with various Return Reason 

codes; and 

• Consolidation of Dishonored Return 

Reason codes. 

We are adopting 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, Back Office 

Conversion (BOC) entries, 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 2008, 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. 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 

consistent 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 Regulation E by making 

corresponding changes to the check 

conversion applications established 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 

are 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, as 

well as all banking information relating 

to ARC entries, until destruction. 

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 

rule wording among various check 

conversion 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 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, 

you authorize us either to use information 

from your check to make a one-time 

electronic fund transfer from your account or 


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52582 Federal Register / Vol. 73, No. 176 / Wednesday, September 10, 2008 / Rules and Regulations 

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, and you will 

not receive your check back from your 

financial institution.’’

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 

deleting Appendices A, B and C from 

part 210, which means that agencies 

may either continue to use the same 

disclosures they are currently using or, 

alternatively, begin using the shorter 

disclosures published in 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 

the check being used to make payment 

does not authorize an ACH debit entry. 

We are adopting 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-of-purchase 

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 the 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-ofpurchase 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 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. 

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 reinitiation 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 


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Federal Register / Vol. 73, No. 176 / Wednesday, September 10, 2008 / Rules and Regulations 52583 

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—

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 are 

incorporating them into part 210. 

III. Section-by-Section Analysis 

In order to incorporate in part 210 the 

ACH rule changes that we are accepting, 

we are replacing references to the 2005 

Rules book with references to the 2007 

ACH Rules book. 

Sec. 210.2(d) 

We are amending 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. 

Sec. 210.3(b) 

We are amending § 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. 

Sec. 210.5 

We are amending § 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 adding a 

new paragraph (b)(4), which provides 

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. 

Sec. 210.6(g) 

We are revising 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 a 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. 

Sec. 210.6(h) 

We are deleting 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 revising the 

text of current § 210.6(i) and 

renumbering it as § 210.6(h). The 

revision clarifies 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 that must be given 

in order to debit an account for an 

insufficient funds service fee is 

unchanged, but has been relocated to 

§ 210.6(h) from Appendices A, B, and C, 

which we are removing 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 rule clearer. For example, 

you may wish to discuss: (1) Whether 

we have organized the material to suite 

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 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 rule will 

not have a significant economic impact 

on a substantial number of small 

entities. The 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 

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 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 are amending 31 CFR part 

210 as follows: 


jlentini on PROD1PC65 with RULES
52584 Federal Register / Vol. 73, No. 176 / Wednesday, September 10, 2008 / Rules and Regulations 

PART 210—FEDERAL GOVERNMENT 

PARTICIPATION IN THE AUTOMATED 

CLEARING HOUSE 

■ 1. The authority citation for part 210 

continues to read as follows: 

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

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

3720. 

■ 2. In § 210.2, revise paragraph (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 of ‘‘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. In § 210.3, revise paragraph (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, http://www.nacha.org. Copies 

also are available for public inspection 

at the Financial Management Service, 

401 14th Street, SW., Room 400A, 

Washington, DC 20227, (202) 874–1251, 

or at the National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/ 

federal_register/ 

code_of_federal_regulations/ 

ibr_locations.html. 

(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 obtaining approval of the 

amended incorporation by reference 

from the Director of the Federal Register 

and publishing an amendment to this 

part in the Federal Register. An 

amendment to the ACH Rules that is 

accepted by the Service and approved 

by the Director of the Federal Register 

for incorporation by reference shall 

apply to Government entries on the 

effective date specified by the Service in 

the Federal Register rulemaking 

expressly accepting such amendment. 

* * * * * 

■ 4. In § 210.5, redesignate paragraph 

(b)(3) as paragraph (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. 

* * * * * 

■ 5. 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 Through C to Part 210 

[Removed] 

■ 6. Remove Appendices A, B and C. 

Dated: August 27, 2008. 

Kenneth E. Carfine, 

Fiscal Assistant Secretary, Department of the 

Treasury. 

[FR Doc. E8–20575 Filed 9–9–08; 8:45 am] 

BILLING CODE 4810–35–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 35 

[EPA–HQ–OW–2006–0765; FRL–8712–7] 

RIN 2040–AE99 

NPDES Voluntary Permit Fee Incentive 

for Clean Water Act Section 106 

Grants; Allotment Formula 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: This final rule revises the 

allotment formula contained in EPA’s 

Clean Water Act (CWA) Section 106 


jlentini on PROD1PC65 with RULES