Federal Government Participation in the Automated Clearing House, 15715-15721 [2020-04992]

Download as PDF Federal Register / Vol. 85, No. 54 / Thursday, March 19, 2020 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES spread of, communicable disease in the United States. To ensure that travelers with recent presence in the United Kingdom, excluding overseas territories outside of Europe, or the Republic of Ireland are screened appropriately, DHS directs that all flights to the United States carrying persons who have recently traveled from, or were otherwise present within, the United Kingdom, excluding overseas territories outside of Europe, or the Republic of Ireland arrive at airports where enhanced public health services and protocols have been implemented. Although DHS will continue to work with carriers to ensure that they identify potential persons who traveled from, or who have otherwise recently been present within, the affected areas prior to boarding, carriers shall comply with the requirements of this document in all cases, including when such persons are identified after boarding but prior to takeoff. On Friday, January 31, 2020, DHS posted a document on the Federal Register public inspection page, announcing the DHS Secretary’s decision that arrival restrictions regarding the People’s Republic of China (excluding the Special Administrative Regions of Hong Kong and Macau) would go into effect at 5 p.m. Eastern Daylight Time on Sunday, February 2, 2020, at seven airports. The document announcing this decision was published in the Federal Register on February 4, 2020 at 85 FR 6044. On Friday, February 7, 2020, DHS published a document adding four airports to the list of airports where flights subject to the arrival restrictions are permitted to land and describing when the arrival restrictions would include those airports. See 85 FR 7214. On Friday, March 13, 2020, DHS posted a document on the Federal Register public inspection page adding two airports to the list of airports where flights subject to the arrival restrictions are permitted to land. As with actions related to the People’s Republic of China, the Islamic Republic of Iran and the countries of the Schengen Area, DHS anticipates that airlines will be able to fully support implementation of these arrival restrictions. Notification of Arrival Restrictions Applicable to All Flights Carrying Persons Who Have Recently Traveled From or Were Otherwise Present Within the United Kingdom, Excluding Overseas Territories Outside of Europe, or the Republic of Ireland Pursuant to 19 U.S.C. 1433(c), 19 CFR 122.32, 49 U.S.C. 114, and 49 CFR VerDate Sep<11>2014 16:12 Mar 18, 2020 Jkt 250001 1544.305 and 1546.105, DHS has the authority to limit the locations where all flights entering the U.S. from abroad may land. Under this authority and effective for flights departing after 11:59 p.m. Eastern Daylight Time on Monday, March 16, 2020, I hereby direct all operators of aircraft to ensure that all flights carrying persons who have recently traveled from, or were otherwise present within, the United Kingdom, excluding overseas territories outside of Europe, or the Republic of Ireland only land at one of the following airports: • John F. Kennedy International Airport (JFK), New York; • Chicago O’Hare International Airport (ORD), Illinois; • San Francisco International Airport (SFO), California; • Seattle-Tacoma International Airport (SEA), Washington; • Daniel K. Inouye International Airport (HNL), Hawaii; • Los Angeles International Airport, (LAX), California; • Hartsfield-Jackson Atlanta International Airport (ATL), Georgia; • Washington-Dulles International Airport (IAD), Virginia; • Newark Liberty International Airport (EWR), New Jersey; • Dallas/Fort Worth International Airport (DFW), Texas; • Detroit Metropolitan Airport (DTW), Michigan; • Boston Logan International Airport (BOS), Massachusetts; and • Miami International Airport (MIA), Florida. This direction considers a person to have recently traveled from, or otherwise been present within, the United Kingdom, excluding overseas territories outside of Europe, or the Republic of Ireland if that person departed from, or was otherwise present within, the United Kingdom, excluding overseas territories outside of Europe, or the Republic of Ireland within 14 days of the date of the person’s entry or attempted entry into the United States. For purposes of this document, crew and flights carrying only cargo (i.e., no passengers or non-crew) are excluded from the applicable measures set forth in this notice. This direction is subject to any changes to the airport landing destination that may be required for aircraft and/or airspace safety, as directed by the Federal Aviation Administration. This list of affected airports may be modified by the Secretary of Homeland Security, in consultation with the Secretary of Health and Human Services and the Secretary of Transportation. PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 15715 This list of affected airports may be modified by an updated publication in the Federal Register or by posting an advisory to follow at www.cbp.gov. The restrictions will remain in effect until superseded, modified, or revoked by publication in the Federal Register. For purposes of this Federal Register document, ‘‘United States’’ means the States of the United States, the District of Columbia, and territories and possessions of the United States (including Puerto Rico, the U.S. Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam). The Acting Secretary of DHS, Chad F. Wolf, having reviewed and approved this document, is delegating the authority to electronically sign this document to Christina E. McDonald, who is the Federal Register Liaison for DHS, for purposes of publication in the Federal Register. Christina E. McDonald, Federal Register Liaison, U.S. Department of Homeland Security. [FR Doc. 2020–05783 Filed 3–16–20; 4:15 pm] BILLING CODE 9111–14–P 9110–05–P DEPARTMENT OF THE TREASURY Fiscal Service 31 CFR Part 210 [FISCAL–2019–0001] RIN 1510–AB32 Federal Government Participation in the Automated Clearing House Bureau of the Fiscal Service, Treasury. ACTION: Final rule. AGENCY: The Department of the Treasury, Bureau of the Fiscal Service (Fiscal Service or ‘‘we’’) is adopting the changes proposed in its Notice of Proposed Rulemaking (NPRM) for its regulation governing the use of the Automated Clearing House (ACH) Network by Federal agencies. Our regulation adopts, with some exceptions, the NACHA Operating Rules developed by NACHA—The Electronic Payments Association (now known as Nacha), as the rules governing the use of the ACH Network by Federal agencies. We are issuing this final rule to address changes that Nacha has made to the NACHA Operating Rules since the publication of the 2016 NACHA Operating Rules & Guidelines book. These changes include amendments set forth in the 2017, 2018, and 2019 SUMMARY: E:\FR\FM\19MRR1.SGM 19MRR1 15716 Federal Register / Vol. 85, No. 54 / Thursday, March 19, 2020 / Rules and Regulations NACHA Operating Rules & Guidelines books with an effective date on or before June 30, 2021. DATES Effective April 20, 2020. The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of April 20, 2020. ADDRESSES: You can download this final rule at the following internet address: https://www.fiscal.treasury.gov/ach/. FOR FURTHER INFORMATION CONTACT: Ian Macoy, Director of Settlement Services, at (202) 874–6835 or ian.macoy@ fiscal.treasury.gov; Natalie H. Diana, Senior Counsel, at (202) 874–6680 or natalie.diana@fiscal.treasury.gov; or Caitlin Gehring, Attorney Advisor, at (202) 874–5710 or caitlin.gehring@ fiscal.treasury.gov. SUPPLEMENTARY INFORMATION: jbell on DSKJLSW7X2PROD with RULES I. Background On January 3, 2020, we published a Notice of Proposed Rulemaking at 85 FR 265, requesting comment on proposed amendments to 31 CFR part 210 (Part 210), which governs the use of the ACH Network by Federal agencies. The ACH Network is a nationwide electronic fund transfer system that provides for the inter-bank clearing of electronic credit and debit transactions and for the exchange of payment-related information among participating financial institutions. Rights and obligations among participants in the ACH Network are governed by the NACHA Operating Rules, which Part 210 incorporates by reference, with certain exceptions. From time to time, the Fiscal Service amends Part 210 in order to address changes that Nacha periodically makes to the NACHA Operating Rules or to revise the regulation as otherwise appropriate. In 2017, Part 210 incorporated the NACHA Operating Rules as set forth in the 2016 NACHA Operating Rules & Guidelines book. Nacha has adopted a number of changes to the NACHA Operating Rules since the publication of the 2016 NACHA Operating Rules & Guidelines book. We are incorporating most, but not all, of the rule changes that Nacha adopted in 2017 and 2018, as set forth in the 2019 NACHA Operating Rules & Guidelines book (2019 Rule Book). We are also adopting one change to Part 210, related to reclamations, that does not stem from a change to the NACHA Operating Rules, and several non-substantive changes to reflect the renumbering of certain NACHA rules and appendices. We are adopting as final all of the amendments proposed in the NPRM. VerDate Sep<11>2014 16:12 Mar 18, 2020 Jkt 250001 II. Public Comment and Fiscal Service Response Fiscal Service sought public comment on the proposed rule to assist the agency in giving full consideration to the matters discussed in the proposed rule. We received comments from two organizations, Nacha and the Independent Community Bankers of America (ICBA), and two individuals, though one of the individual’s comment did not discuss the proposed rule and is therefore not addressed. Both Nacha and ICBA supported the proposed adoption of the NACHA Rules as set forth in the 2019 NACHA Operating Rules & Guidelines, as well as our proposed change to the provision related to actual or constructive notice of death. We appreciate Nacha’s and ICBA’s support of the changes and Fiscal Service’s efforts to embrace the ACH operating rules. ICBA, Nacha and one individual commenter also supported Fiscal Service’s proposed adoption of The Supplementing Fraud Detection Standards for WEB Debits rule, though both ICBA and Nacha urged Fiscal Service to adopt the rule by Nacha’s effective date of March 19, 2021. The Supplementing Fraud Detection Standards for WEB Debits rule will require originators of WEB debit entries to perform account validation before originating a WEB debit to an account for the first time and upon a change to an account number receiving WEB debit entries. Fraud prevention is a top priority of Fiscal Service and we will be actively working toward implementing account validation for agency originated WEB debits. However, government-wide implementation is not feasible by the March 2021 deadline. Implementing this change affects multiple systems and requires substantial lead time and additional financial resources. We expect some of our systems will be compliant by Nacha’s deadline but know that government-wide compliance will not be possible by March 2021. Therefore, Fiscal Service is delaying the effective date of this rule to March 19, 2022. One individual commenter opposed the increase, for Same Day ACH eligibility, of the maximum per-entry amount from the current $25,000 to $100,000 (Same Day ACH Dollar Limit Increase) as potentially contributing to greater exposure to losses from fraud or error. However, we would note that other ACH entries (generally next-day or future-day settlement) already have a much higher, system-imposed limit of $99,999,999.99. Further, the ACH Network and Part 210 provide parties PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 return rights in the event that fraud or an error in the valuation of an entry has occurred. We view the benefits of the Same Day ACH Dollar Limit Increase to parties paying or receiving funds from the federal government, together with existing protections inherent to the government’s use of the ACH Network, as exceeding any marginal increase in risk resulting from a higher Same Day ACH entry limit. Accordingly, we are adopting the increase in the Same Day ACH Dollar Limit to $100,000. III. Summary of Final Rule A. 2017 NACHA Operating Rules & Guidelines Book (2017 Rules Book) Changes In 2017 Nacha adopted a new rule, the Third-Party Sender Rule, which requires every Originating Depository Financial Institution (ODFI) either to register its Third-Party Sender customers with Nacha or to provide Nacha with a statement that it has no such customers. The rule, which became effective on September 29, 2017, establishes deadlines for the initial provision and updating of registration information, and provides that Nacha may request from an ODFI certain additional information regarding a Third-Party Sender. A Third-Party Sender is a type of third-party service provider that acts as an intermediary in transmitting entries between an Originator and an ODFI. Federal agencies and Fiscal Service do not utilize Third-Party Senders. Although Fiscal Service uses fiscal and financial agents (Federal Reserve Banks and certain chartered depository financial institutions, respectively) in its ACH payments and collections operations, those entities are not providing services in a capacity as Third-Party Senders. Accordingly, the rule will not affect the Federal government. We are incorporating in Part 210 the Third-Party Sender Rule. B. 2018 NACHA Operating Rules & Guidelines Book (2018 Rules Book) Changes Nacha did not publish any new rules in the 2018 Rules Book. The 2018 Rule Book contains revisions related to the implementation of Phase 2 of Same Day ACH, which we adopted in 2017 (See 82 FR 42597), and the Third-Party Sender Rule discussed in Section A above. C. 2019 NACHA Operating Rules & Guidelines Book (2019 Rules Book) Changes The 2019 Rules Book contains changes related to the following amendments: E:\FR\FM\19MRR1.SGM 19MRR1 Federal Register / Vol. 85, No. 54 / Thursday, March 19, 2020 / Rules and Regulations • Faster Funds Availability; • Same Day ACH Dollar Limit Increase; and • New Same Day ACH Processing Window. In the Final Rule we are adopting all three of these amendments to the 2019 Rules Book in Part 210, as follows: jbell on DSKJLSW7X2PROD with RULES 1. Faster Funds Availability The Faster Funds Availability rule will provide faster funds availability for many ACH credits. Funds from Same Day ACH credits processed in the first Same Day processing window will be made available to the Receiver for withdrawal by 1:30 p.m., Receiving Depository Financial Institution (RDFI) local time. Funds from all non-Same Day ACH credits that are made available to the RDFI by 5:00 p.m., RDFI local time, on the banking day before Settlement Date will be available to the Receiver for withdrawal by 9:00 a.m., RDFI local time, on Settlement Date. Previously, funds from non-Same Day ACH credits were required to be made available to the Receiver for withdrawal by the end of the Settlement Date, which could be at any hour before the RDFI’s close of business or by the end of day at an ATM. One exception was for Prearranged Payment and Deposit (PPD) credits made available to the RDFI by 5:00 p.m., RDFI local time, on the banking day before Settlement Date. The RDFI was required to provide funds availability for these credits by the opening of business on Settlement Date. This exception is now the standard practice for any ACH credit made available to the RDFI by 5:00 p.m., RDFI local time, on the banking day before Settlement Date. This rule change also establishes a firm time of 9:00 a.m., RDFI local time, for such availability and eliminates references to ‘‘opening of business.’’ Receivers will have earlier funds availability for a large portion of ACH credits: • Funds from non-Same Day ACH credits made available to the RDFI by 5:00 p.m., RDFI local time, on the banking day before settlement will be available to the Receiver for withdrawal on Settlement Date by 9:00 a.m., RDFI local time; • Funds from Same Day credits received in the first Same Day ACH processing window will be available to the Receiver for withdrawal by 1:30 p.m., RDFI local time; and • Funds from Same Day credits received in the second Same Day ACH processing window will be available to the Receiver for withdrawal by 5:00 p.m., RDFI local time. VerDate Sep<11>2014 16:12 Mar 18, 2020 Jkt 250001 This NACHA rule became effective on September 20, 2019. We are accepting this amendment. Because the government is not a depository institution, the rule will not affect the government’s receipt of ACH payments, but will mean that some recipients of government Same Day and non-Same Day ACH payments will have earlier access to their funds from their financial institutions. 2. Same Day ACH Dollar Limit Increase The Same Day ACH Dollar Limit Increase rule will increase the pertransaction dollar limit for Same Day transactions from $25,000 to $100,000. At implementation, both Same Day ACH credits and Same Day ACH debits will be eligible for Same Day processing up to $100,000 per transaction. Nacha’s rule is effective on March 20, 2020. We are accepting this rule, which will enable individuals and entities to make Same Day ACH payments of up to $100,000 to the government, and will enable Federal agencies to make Same Day ACH payments of up to $100,000. 3. New Same Day ACH Processing Window The New Same Day ACH Processing Window rule will create a new processing window that will enable ODFIs and their customers to originate Same Day transactions for an additional two hours each banking day. The new window will allow Same Day ACH files to be submitted to the ACH Operators until 4:45 p.m. ET. RDFIs will receive files from this third window by 5:30 p.m. ET, with interbank settlement occurring at 6:00 p.m. ET. RDFIs will need to make funds available for credits processed in the new window by the end of their processing for that Settlement Date. All credits and debits, and all returns, will be eligible to be processed in the new Same Day ACH window, with the exception of International ACH Transactions (IATs), Automated Enrollment Entries (ENRs), and forward entries in excess of the pertransaction dollar limit. Currently, ODFIs can submit Same Day ACH files to the ACH Operators until 2:45 p.m. ET. ODFI processing arrangements that use payment processors and correspondent institutions have earlier deadlines. ACH end-users may have even earlier deadlines to submit Same Day ACH files to their ODFIs. These timing requirements can make it impractical for many ODFIs to offer, or for ACH endusers to adopt, Same Day ACH payments. Adding a third, later Same Day ACH processing window will PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 15717 provide greater access for all ODFIs and their customers. Nacha’s rule is effective on March 19, 2021. We are accepting this rule, which will give more individuals and entities the opportunity to pay the government by Same Day ACH. It will also make it possible for the government to originate Same Day ACH payments later in the day than is currently possible. D. Supplement #2–2018 to the NACHA Operating Rules Changes On November 2, 2018, the NACHA Voting Membership approved nine amendments to the NACHA Operating Rules. Because the nine amendments were approved just prior to publication of the 2019 Rules Book, the amendments are included in the rule book as a separate supplement rather than within the main body of the publication. 1. Return for Questionable Transaction Before adoption of this amendment, an RDFI could return an ACH entry for any reason, except as otherwise provided in Article Three, Subsection 3.8.1 (Restrictions on RDFI’s Right to Transmit Return Entries) of the NACHA Operating Rules. Defined return reasons included, among others, entries that were deemed unauthorized by the Receiver or those with an invalid account number or no account at the RDFI. If an RDFI wanted to return an entry that did not have a valid account number and appeared to be questionable, suspicious, or anomalous in some way, the RDFI did not have a defined return reason code to communicate this information to the ODFI and Originator. NACHA guidance allowed RDFIs to use reason code R17 to return questionable transactions that would otherwise be returned using a standard administrative return reason (R03—No Account/Unable to Locate Account or R04—Invalid Account Number Structure). However, none of these options enabled an ODFI or its Originator to differentiate questionable transactions from other routine account number errors. Under the Return for Questionable Transaction rule, RDFIs are able (but not required) to use Return Reason Code R17—File Record Edit Criteria to indicate that the RDFI believes the entry containing invalid account information was initiated under questionable circumstances. This use of R17 is optional at the discretion of the RDFI. Those RDFIs that elect to use R17 for this purpose are required to use the description ‘‘QUESTIONABLE’ in the Addenda Information field of the return. This description in an R17 return E:\FR\FM\19MRR1.SGM 19MRR1 15718 Federal Register / Vol. 85, No. 54 / Thursday, March 19, 2020 / Rules and Regulations differentiates returns that appear to be suspicious to the RDFI from those due to routine account number issues. This rule became effective on June 21, 2019. We are accepting this amendment, which may give agencies greater insight into transactions that are returned because they are suspicious or questionable. jbell on DSKJLSW7X2PROD with RULES 2. Supplementing Fraud Detection Standards for WEB Debits Under existing rules, Originators of internet-initiated (WEB) debit entries must use a ‘‘commercially reasonable fraudulent transaction detection system’’ to screen WEB debits for fraud. This requirement is intended to help prevent fraudulent payments from being introduced into the ACH Network, and to help protect RDFIs from posting fraudulent or otherwise incorrect or unauthorized payments. With the implementation of the Supplementing Fraud Detection Standards for WEB Debits rule, the current screening requirement will be enhanced to make it explicit that ‘‘account validation’’ is part of a ‘‘commercially reasonable fraudulent transaction detection system.’’ The supplemental requirement applies to the first use of an account number, or changes to the account number. For existing WEB debit authorizations, the rule will be effective on a going-forward basis. Originators will have to perform account validations as there are updates to account numbers in existing authorizations. NACHA’s rule is effective on March 19, 2021. We are accepting this rule, which can be expected to reduce unauthorized debits originated by agencies and resulting fraud losses to the government. However, the implementation of account validation will be costly for the government due to the need for systems changes, program changes at originating Federal agencies, and transactional fees for validation services incurred for the origination of WEB debits. Acceptance of the rule will result in significant additional costs to the government in the origination of WEB debits but could also have the unintended consequence of providing an incentive for agencies to encourage or restrict the public to use payment methods other than ACH that represent lower cost to the government or offer greater transaction certainty at a comparable cost. Given the anticipated costs of implementation, we are delaying the effective date of our acceptance of this NACHA rule change to March 19, 2022. We will work toward implementing this rule in the next two VerDate Sep<11>2014 16:12 Mar 18, 2020 Jkt 250001 years and expect several of our systems to comply prior to the 2022 date. 3. Supplementing Data Security Requirements The existing ACH Security Framework requires Financial Institutions, Originators, Third-Party Service Providers, and Third-Party Senders to establish, implement and update security policies, procedures and systems related to the initiation, processing and storage of ACH entries. These policies, procedures, and systems must protect the confidentiality and integrity of protected information; protect against anticipated threats or hazards to the security or integrity of Protected Information; and protect against unauthorized use of Protected Information that could result in substantial harm to a natural person. The Supplementing Data Security Requirements rule expands the existing ACH Security Framework to explicitly require large, non-financial institution Originators, Third-Party Service Providers, and Third-Party Senders to protect account numbers used in the initiation of ACH entries by rendering them unreadable when stored electronically. The rule aligns with existing language contained in Payment Card Industry (PCI) requirements, thus industry participants are expected to be reasonably familiar with the manner and intent of the requirement. The rule applies only to account numbers collected for or used in ACH transactions and does not apply to the storage of paper authorizations. The rule also does not apply to depository financial institutions when acting as internal Originators, as they are covered by existing Federal Financial Institutions Examination Council (FFIEC) and similar data security requirements and regulations. The amendment has a phased implementation period, with the following effective dates: • Phase 1: NACHA Operating Rules language is effective on June 30, 2020. Any Originator, Third-Party Service Provider, or Third-Party Sender that originates six million or more ACH transactions in calendar year 2019 will need to be compliant by June 30, 2020. • Phase 2: NACHA Operating Rules language will become effective on June 30, 2021. Any Originator, Third-Party Service Provider, or Third-Party Sender that originates two million or more ACH transactions in calendar year 2020 will need to be compliant by June 30, 2021. Going forward after calendar year 2020, any Originator, Third-Party Service Provider, or Third-Party Sender that originates two million or more ACH PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 transactions in any calendar year will need to be compliant with the rule by June 30 of the following calendar year. Fiscal Service supports the expansion of existing security requirements to require large non-financial institution Originators to protect account numbers used to initiate ACH transactions by rendering them unreadable while stored electronically. We are accepting this amendment. 4. ACH Rules Compliance Audit Requirements Effective January 1, 2019 Nacha consolidated all requirements for an annual rules compliance audit within one section of the NACHA Operating Rules. Prior to the rule change, the general obligation for Participating Depository Financial Institutions (and certain Third-Party Service Providers and Third-Party Senders) to conduct an audit was located within Article One, Section 1.2.2 (Audits of Rules Compliance). However, the details pertaining to that audit obligation were separately located within Appendix Eight (Rules Compliance Audit Requirements). This amendment retained and combined the core audit obligation with the general administrative requirements for completion of such an audit into Article One of the NACHA Operating Rules. Under current 31 CFR 210.2(d), the rule enforcement and compliance audit requirements are not applicable to Federal agencies. We are therefore not adopting this amendment. 5. Minor Rules Topics These amendments change five specific areas of the NACHA Operating Rules to address minor issues. Minor changes to the NACHA Operating Rules have little-to-no impact on ACH participants and no significant economic impact. NACHA’s minor rule amendments became effective on January 1, 2019. i. ACH Operator Edits The ACH Operator Edits amendment modifies edit criteria to permit ACH Operators to ‘‘pend’’ files as an alternative to rejecting files under various error conditions, primarily related to duplicate file detection. The rule incorporates language to clarify that ACH Operator edits defined within Appendix Two of the NACHA Operating Rules represent minimum standards required by the NACHA Operating Rules, and that additional edits can be adopted by each ACH Operator as part of its service agreement with its customers. We are accepting this amendment. E:\FR\FM\19MRR1.SGM 19MRR1 Federal Register / Vol. 85, No. 54 / Thursday, March 19, 2020 / Rules and Regulations ii. Clarification of Telephone-Initiated Entry (TEL) Authorization Requirements This amendment clarifies that the general rules governing the form of authorization for all consumer debits apply to the authorization of TEL entries, including the obligation to include revocation language. Only Accounts Receivable (ARC), Back Office Conversion (BOC), Point-of-Purchase (POP), and Re-presented Check (RCK) entries are explicitly exempted from the requirement to include revocation language in the authorization. The Clarification of TEL Authorization Requirements rule also incorporates a reference that TEL entries are consumer debits only, consistent with the language for other consumer debits. We are accepting this amendment. iii. Clarification of RDFI Obligation To Return Credit Entry Declined by Receiver This rule change reflects pre-existing practices regarding circumstances under which an RDFI is, or is not, obligated to return a credit entry that has been declined by a Receiver. The Clarification of RDFI Obligation to Return Credit Entry Declined by Receiver rule expressly identifies specific conditions under which the RDFI is excused from its obligation to return a credit: —There are insufficient funds available to satisfy the return, including due to any third party lien or security interest. —The return is prohibited by legal requirements. —The RDFI itself has a claim against the proceeds of the credit entry, including by offset, lien, or security interest. The rule change also modifies the rule language to refer to an entry being ‘‘declined’’ (rather than ‘‘refused’’) by the Receiver. We are accepting this amendment. iv. Clarification on Reinitiation of Return Entries This amendment is an editorial change to the language of the general rule on Reinitiated Entries to clarify the intent of the Rules that reinitiation is limited to two times. We are accepting this amendment. jbell on DSKJLSW7X2PROD with RULES v. Clarification on RDFI Liability Upon Receipt of a Written Demand for Payment This amendment contains editorial changes regarding conditions under which an RDFI may return a Reclamation Entry or reject a Written Demand for Payment. These changes also clarify that an RDFI may reject a VerDate Sep<11>2014 16:12 Mar 18, 2020 Jkt 250001 Written Demand for Payment only if it was not properly originated by the ODFI. We are accepting this amendment. E. Differentiating Unauthorized Return Reasons On April 12, 2019, NACHA Voting Membership approved Ballot #1–2019: Differentiating Unauthorized Return Reasons. The rule repurposes an existing, little-used return reason code (R11) that will be used when a receiving customer claims that there was an error with an otherwise authorized payment. Currently, return reason code R10 is used as a catch-all for various types of underlying unauthorized return reasons, including some for which a valid authorization exists, such as a debit on the wrong date or for the wrong amount. In these types of cases, a return of the debit still should be made, but the Originator and its customer (the Receiver) might both benefit from a correction of the error rather than the termination of the origination authorization. The use of a distinct return reason code (R11) enables a return that conveys this new meaning of ‘‘error’’ rather than ‘‘no authorization.’’ The rule becomes effective in two phases. On April 1, 2020, the repurposed return code becomes effective, and financial institutions will use it for its new purpose. A year later, on April 1, 2021, the re-purposed return code will become covered by the existing Unauthorized Entry Fee. We are accepting this amendment. F. Actual or Constructive Knowledge of Death 31 CFR part 210 subpart B governs the reclamation of post-death Federal benefit payments from financial institutions. Under Subpart B, both agencies and RDFIs have obligations, rights and liabilities that are triggered by actual or constructive knowledge of the death or incapacity of a recipient or death of a beneficiary. See § 210.10(c), (d); § 210.11(a). An agency that initiates a request for a reclamation must do so within 120 calendar days after the date that the agency first has actual or constructive knowledge of the death or legal incapacity of a recipient or the death of a beneficiary. However, the definition of ‘‘actual or constructive’’ knowledge for this purpose is not explicitly addressed in the definition at § 210.2(b), which refers only to RDFIs. Fiscal Service is revising the definition of ‘‘actual or constructive knowledge of death’’ at 31 CFR 210.2(b) to apply the definition to agencies as well as RDFIs. In addition, we are adding a sentence to the definition to PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 15719 address a specific situation that has arisen in recent years in which agencies sometimes stop recurring payments to a recipient and, many months or years after stopping the payments, initiate a reclamation. As revised, § 210.2(b) requires an agency that stops certifying recurring payments to a recipient because it has reason to believe that the recipient is deceased to investigate and determine whether to initiate a reclamation within 120 days following the first missed payment date. An agency may receive information or otherwise have reason to believe that a recipient is deceased before it takes action to stop payments. However, we believe that the first missed recurring payment date preceding the initiation of a reclamation is the most apparent indicator that the agency has information of a recipient’s death that is sufficiently reliable to warrant stopping payments. Accordingly, the phrase ‘‘the time [the agency] stops certifying recurring payments to a recipient’’ refers to the first missed payment date. The language would not generally apply to or affect situations in which agencies stop payments due to fraud or loss of entitlement because in most of those cases agencies would not be initiating a reclamation. In addition, the language would not generally affect situations in which an agency stops payments due to a mistaken belief that the recipient was deceased, because those payments would be reinitiated upon discovery of the mistake. Moreover, in the event that an agency initiates a reclamation more than 120 days after stopping payments and can prove that it stopped payments for a reason other than actual or constructive knowledge of death, the agency can present evidence to rebut the presumption of knowledge, in which case the 120-day deadline would not be triggered by the date the agency stopped payments. Agencies have indicated that sometimes they have difficulty obtaining definitive proof of death (i.e., a death certificate) within 120 days of receiving constructive knowledge of death, and that therefore they may wait for a protracted period of time before initiating a reclamation. However, the legal standard applicable to agencies initiating a reclamation is not receipt of a death certificate (actual knowledge), but actual or constructive knowledge. We requested comment on this revision. Both commenters supported this change, which we are adopting in the final rule. E:\FR\FM\19MRR1.SGM 19MRR1 15720 Federal Register / Vol. 85, No. 54 / Thursday, March 19, 2020 / Rules and Regulations IV. Section-by-Section Analysis § 210.3(b) Regulatory Flexibility Act Analysis In order to incorporate in Part 210 the NACHA Operating Rule changes that we are accepting, we are replacing references to the 2016 NACHA Rules & Guidelines book with references to the 2019 NACHA Operating Rules & Guidelines book. The NACHA Operating Rule amendment that we are not incorporating is a modification to the audit compliance provisions of the NACHA Operating Rules, which are already excluded under Part 210. Other than replacing the references to the 2016 NACHA Operating Rules & Guidelines book, no change to Part 210 is necessary to exclude this amendment. We are amending § 210.3(b) by replacing the references to the 2016 NACHA Operating Rules & Guidelines with references to a 2019 NACHA Operating Rules & Guidelines. It is hereby certified that the final rule will not have a significant economic impact on a substantial number of small entities. The final rule imposes on the Federal government a number of changes that Nacha has already adopted and imposed on private sector entities that utilize the ACH Network. The final rule does not impose any additional burdens, costs or impacts on any private sector entities, including any small entities. Accordingly, a regulatory flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) is not required. § 210.2(b) We are amending the definition of ‘‘actual or constructive knowledge’’ in order to clarify that the definition applies to agencies as well as to RDFIs. We are also adding a sentence to the definition to address situations in which agencies stop recurring payments to a recipient and subsequently initiate a reclamation. Under the revised definition, an agency is presumed to have constructive knowledge of death or incapacity at the time it stops certifying recurring payments to a recipient if the agency (1) does not re-initiate payments to the recipient and (2) subsequently initiates a reclamation for one or more payments made to the recipient. The presumption created under the definition is rebuttable in cases where an agency can demonstrate that it stopped certifying recurring payments to a recipient for a reason other than death. jbell on DSKJLSW7X2PROD with RULES § 210.2(d) We are amending the definition of ‘‘applicable ACH Rules’’ at § 210.2(d) by replacing the reference to NACHA’s 2016 Operating Rules & Guidelines with a reference to the ACH Rules with an effective date on or before June 30, 2021, as published in ‘‘2019 NACHA Operating Rules & Guidelines.’’ We are deleting the reference to Appendix Ten in subparagraph (1) because Appendix Eight is being removed in its entirety from the 2019 Rules Book, and Appendices Nine and Ten are being renumbered as Appendices Eight and Nine, respectively. We are deleting existing paragraph (7), which relates to the government’s original adoption of Same Day ACH in 2017, because it was in effect only until September 15, 2017, and is now obsolete. We are adding a new paragraph (7), which exempts the government from the Fraud Detection Standards for WEB debits until March 19, 2022. VerDate Sep<11>2014 16:12 Mar 18, 2020 Jkt 250001 § 210.6 We are amending paragraph (g) by replacing the reference to the 2016 NACHA Operating Rules & Guidelines with a reference to a 2019 NACHA Operating Rules & Guidelines. § 210.10(b) We are amending § 210.10(b) to state that an agency is presumed to have constructive knowledge of death or incapacity at the time it stops certifying recurring payments to a recipient if the agency (1) does not re-initiate payments to the recipient and (2) subsequently initiates a reclamation for one or more payments made to the recipient. V. Incorporation by Reference The 2019 NACHA Operating Rules & Guidelines are incorporated by reference into Part 210 with the approval of the Director of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. The Office of Federal Register (OFR) regulations require that agencies discuss in the preamble of a final rule ways that the materials the agency proposes to incorporate by reference are reasonably available to interested parties or how it worked to make those materials reasonably available to interested parties. In addition, the preamble of the final rule must summarize the material. 1 CFR 51.5(a). In accordance with OFR’s requirements, the discussion in the Supplementary Information section summarizes the 2019 NACHA Operating Rules. Financial institutions utilizing the ACH Network are bound by the NACHA Operating Rules and have access to the NACHA Operating Rules in the course of their everyday business. All approved material is available as a bound book or in online form from NACHA, 2550 Wasser Terrace, Suite 400, Herndon, Virginia 20171, tel. 703– 561–1100, info@NACHA.org. VI. Procedural Analysis Regulatory Planning and Review The final 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. PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 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 final rule will not result in expenditures by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. Accordingly, we have not prepared a budgetary impact statement or specifically addressed any regulatory alternatives. List of Subjects in 31 CFR Part 210 Automated Clearing House, Electronic funds transfer, Financial institutions, Fraud, Incorporation by reference. Words of Issuance For the reasons set out in the preamble, amend 31 CFR part 210 to read as follows: ■ PART 210—FEDERAL GOVERNMENT PARTICIPATION IN THE AUTOMATED CLEARING HOUSE 1. The authority citation for part 210 continues to read as follows: ■ Authority: 5 U.S.C. 5525; 12 U.S.C. 391; 31 U.S.C. 321, 3301, 3302, 3321, 3332, 3335, and 3720. 2. In § 210.2, revise paragraphs (b) and (d) to read as follows: ■ § 210.2 * E:\FR\FM\19MRR1.SGM * Definitions. * 19MRR1 * * jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 85, No. 54 / Thursday, March 19, 2020 / Rules and Regulations (b) Actual or constructive knowledge, when used in reference to an RDFI’s or agency’s knowledge of the death or incapacity of a recipient or death of a beneficiary, means that the RDFI or agency received information, by whatever means, of the death or incapacity and has had a reasonable opportunity to act on such information or that the RDFI or agency would have learned of the death or incapacity if it had followed commercially reasonable business practices. For purposes of subpart B of this part, an agency is presumed to have constructive knowledge of death or incapacity at the time it stops certifying recurring payments to a recipient if the agency: (1) Does not re-initiate payments to the recipient; and (2) Subsequently initiates a reclamation for one or more payments made to the recipient. * * * * * (d) Applicable ACH Rules means the ACH Rules with an effective date on or before June 30, 2021, as published in the 2019 NACHA Operating Rules and Guidelines (incorporated by reference, see § 210.3(b)), except: (1) Subsections 1.2.2, 1.2.3, 1.2.4, 1.2.5 and 1.2.6; Appendix Seven; Appendix Eight; and Appendix Nine (governing the enforcement of the ACH Rules and claims for compensation); (2) Section 2.10 and section 3.6 (governing the reclamation of benefit payments); (3) The requirement in Appendix Three that the Effective Entry Date of a credit entry be no more than two Banking Days following the date of processing by the Originating ACH Operator (see definition of ‘‘Effective Entry Date’’ in Appendix Three); (4) Section 2.2 (setting forth ODFI obligations to enter into agreements with, and perform risk management relating to, Originators and Third-Party Senders) and section 1.6 (Security Requirements); (5) Section 2.17.2.2–2.17.2.6 (requiring reduction of high rates of entries returned as unauthorized); (6) The requirements of Section 2.5.8 (International ACH Transactions) shall not apply to entries representing the payment of a Federal tax obligation by a taxpayer; and (7) Until March 19, 2022, the requirement of section 2.5.17.4(a) that the Originator utilize a fraudulent transaction detection system that validates an account to be debited for the first use of such account number and for any subsequent change(s) to the account number. * * * * * VerDate Sep<11>2014 16:12 Mar 18, 2020 Jkt 250001 3. In § 210.3, revise paragraph (b) to read as follows: ■ § 210.3 Governing law. * * * * * (b) Incorporation by reference. Certain material is incorporated by reference in this part with the approval of the Direct of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other than that specified in this section the Service must publish a document in the Federal Register and the material must be available to the public. All approved material is available for inspection at the Bureau of the Fiscal Service, 401 14th Street SW, Room 400A, Washington, DC 20227, ph. 202 874–6680, and it is available from the sources listed below. It is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, email fedreg.legal@nara.gov or go to www.archives.gov/federal-register/cfr/ ibr-locations.html. (1) NACHA, 2550 Wasser Terrace, Suite 400, Herndon, Virginia 20171, tel. 703–561–1100, info@nacha.org. (i) 2019 NACHA Operating Rules & Guidelines: The Guide to the Rules Governing the ACH Network, copyright 2019 (2019 NACHA Operating Rules and Guidelines). (ii) [Reserved] (2) [Reserved] * * * * * ■ 4. In § 210.6, revise paragraph (g) to read as follows: § 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. The requirements of the 2019 NACHA Operating Rules and Guidelines, incorporated by reference, see § 210.3(b), 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. * * * * * ■ 5. In § 210.10, revise paragraph (b) to read as follows: § 210.10 RDFI liability. * * * * * (b) Actual or Constructive Knowledge of Death. Actual or constructive knowledge, when used in reference to an RDFI’s or agency’s knowledge of the death or incapacity of a recipient or death of a beneficiary, means that the PO 00000 Frm 00009 Fmt 4700 RDFI or agency received information, by whatever means, of the death or incapacity and has had a reasonable opportunity to act on such information or that the RDFI or agency would have learned of the death or incapacity if it had followed commercially reasonable business practices. For purposes of this subpart, an agency is presumed to have constructive knowledge of death or incapacity at the time it stops certifying recurring payments to a recipient if the agency: (1) Does not re-initiate payments to the recipient; and (2) Subsequently initiates a reclamation for one or more payments made to the recipient. * * * * * David A. Lebryk, Fiscal Assistant Secretary. [FR Doc. 2020–04992 Filed 3–18–20; 8:45 am] BILLING CODE 4810–AS–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [Docket Number USCG–2019–0460] RIN 1625–AA00 Safety Zone; San Juan Harbor, San Juan, PR Sfmt 4700 Coast Guard, DHS. Final rule. AGENCY: ACTION: * 15721 The Coast Guard is adjusting an existing moving safety zone for San Juan Harbor, San Juan, Puerto Rico. This action is necessary to better meet the safety and security needs of San Juan Harbor. This regulation would continue to prohibit persons and vessels from entering the safety zone, unless authorized by the Captain of the Port San Juan or a designated representative. DATES: This rule is effective April 20, 2020. SUMMARY: To view documents mentioned in this preamble as being available in the docket, go to https:// www.regulations.gov, type USCG–2019– 0460 in the ‘‘SEARCH’’ box and click ‘‘SEARCH.’’ Click on Open Docket Folder on the line associated with this rule. FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, call or email Lieutenant Commander Pedro Mendoza, Sector San Juan Prevention Department, Waterways Management Division, U.S. Coast Guard; telephone ADDRESSES: E:\FR\FM\19MRR1.SGM 19MRR1

Agencies

[Federal Register Volume 85, Number 54 (Thursday, March 19, 2020)]
[Rules and Regulations]
[Pages 15715-15721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04992]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 210

[FISCAL-2019-0001]
RIN 1510-AB32


Federal Government Participation in the Automated Clearing House

AGENCY: Bureau of the Fiscal Service, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury, Bureau of the Fiscal Service 
(Fiscal Service or ``we'') is adopting the changes proposed in its 
Notice of Proposed Rulemaking (NPRM) for its regulation governing the 
use of the Automated Clearing House (ACH) Network by Federal agencies. 
Our regulation adopts, with some exceptions, the NACHA Operating Rules 
developed by NACHA--The Electronic Payments Association (now known as 
Nacha), as the rules governing the use of the ACH Network by Federal 
agencies. We are issuing this final rule to address changes that Nacha 
has made to the NACHA Operating Rules since the publication of the 2016 
NACHA Operating Rules & Guidelines book. These changes include 
amendments set forth in the 2017, 2018, and 2019

[[Page 15716]]

NACHA Operating Rules & Guidelines books with an effective date on or 
before June 30, 2021.

DATES Effective April 20, 2020. The incorporation by reference of 
certain publications listed in the rule is approved by the Director of 
the Federal Register as of April 20, 2020.

ADDRESSES: You can download this final rule at the following internet 
address: https://www.fiscal.treasury.gov/ach/.

FOR FURTHER INFORMATION CONTACT: Ian Macoy, Director of Settlement 
Services, at (202) 874-6835 or [email protected]; Natalie 
H. Diana, Senior Counsel, at (202) 874-6680 or 
[email protected]; or Caitlin Gehring, Attorney 
Advisor, at (202) 874-5710 or [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    On January 3, 2020, we published a Notice of Proposed Rulemaking at 
85 FR 265, requesting comment on proposed amendments to 31 CFR part 210 
(Part 210), which governs the use of the ACH Network by Federal 
agencies. The ACH Network is a nationwide electronic fund transfer 
system that provides for the inter-bank clearing of electronic credit 
and debit transactions and for the exchange of payment-related 
information among participating financial institutions. Rights and 
obligations among participants in the ACH Network are governed by the 
NACHA Operating Rules, which Part 210 incorporates by reference, with 
certain exceptions. From time to time, the Fiscal Service amends Part 
210 in order to address changes that Nacha periodically makes to the 
NACHA Operating Rules or to revise the regulation as otherwise 
appropriate.
    In 2017, Part 210 incorporated the NACHA Operating Rules as set 
forth in the 2016 NACHA Operating Rules & Guidelines book. Nacha has 
adopted a number of changes to the NACHA Operating Rules since the 
publication of the 2016 NACHA Operating Rules & Guidelines book. We are 
incorporating most, but not all, of the rule changes that Nacha adopted 
in 2017 and 2018, as set forth in the 2019 NACHA Operating Rules & 
Guidelines book (2019 Rule Book). We are also adopting one change to 
Part 210, related to reclamations, that does not stem from a change to 
the NACHA Operating Rules, and several non-substantive changes to 
reflect the renumbering of certain NACHA rules and appendices.
    We are adopting as final all of the amendments proposed in the 
NPRM.

II. Public Comment and Fiscal Service Response

    Fiscal Service sought public comment on the proposed rule to assist 
the agency in giving full consideration to the matters discussed in the 
proposed rule. We received comments from two organizations, Nacha and 
the Independent Community Bankers of America (ICBA), and two 
individuals, though one of the individual's comment did not discuss the 
proposed rule and is therefore not addressed. Both Nacha and ICBA 
supported the proposed adoption of the NACHA Rules as set forth in the 
2019 NACHA Operating Rules & Guidelines, as well as our proposed change 
to the provision related to actual or constructive notice of death. We 
appreciate Nacha's and ICBA's support of the changes and Fiscal 
Service's efforts to embrace the ACH operating rules.
    ICBA, Nacha and one individual commenter also supported Fiscal 
Service's proposed adoption of The Supplementing Fraud Detection 
Standards for WEB Debits rule, though both ICBA and Nacha urged Fiscal 
Service to adopt the rule by Nacha's effective date of March 19, 2021. 
The Supplementing Fraud Detection Standards for WEB Debits rule will 
require originators of WEB debit entries to perform account validation 
before originating a WEB debit to an account for the first time and 
upon a change to an account number receiving WEB debit entries. Fraud 
prevention is a top priority of Fiscal Service and we will be actively 
working toward implementing account validation for agency originated 
WEB debits. However, government-wide implementation is not feasible by 
the March 2021 deadline. Implementing this change affects multiple 
systems and requires substantial lead time and additional financial 
resources. We expect some of our systems will be compliant by Nacha's 
deadline but know that government-wide compliance will not be possible 
by March 2021. Therefore, Fiscal Service is delaying the effective date 
of this rule to March 19, 2022.
    One individual commenter opposed the increase, for Same Day ACH 
eligibility, of the maximum per-entry amount from the current $25,000 
to $100,000 (Same Day ACH Dollar Limit Increase) as potentially 
contributing to greater exposure to losses from fraud or error. 
However, we would note that other ACH entries (generally next-day or 
future-day settlement) already have a much higher, system-imposed limit 
of $99,999,999.99. Further, the ACH Network and Part 210 provide 
parties return rights in the event that fraud or an error in the 
valuation of an entry has occurred. We view the benefits of the Same 
Day ACH Dollar Limit Increase to parties paying or receiving funds from 
the federal government, together with existing protections inherent to 
the government's use of the ACH Network, as exceeding any marginal 
increase in risk resulting from a higher Same Day ACH entry limit. 
Accordingly, we are adopting the increase in the Same Day ACH Dollar 
Limit to $100,000.

III. Summary of Final Rule

A. 2017 NACHA Operating Rules & Guidelines Book (2017 Rules Book) 
Changes

    In 2017 Nacha adopted a new rule, the Third-Party Sender Rule, 
which requires every Originating Depository Financial Institution 
(ODFI) either to register its Third-Party Sender customers with Nacha 
or to provide Nacha with a statement that it has no such customers. The 
rule, which became effective on September 29, 2017, establishes 
deadlines for the initial provision and updating of registration 
information, and provides that Nacha may request from an ODFI certain 
additional information regarding a Third-Party Sender.
    A Third-Party Sender is a type of third-party service provider that 
acts as an intermediary in transmitting entries between an Originator 
and an ODFI. Federal agencies and Fiscal Service do not utilize Third-
Party Senders. Although Fiscal Service uses fiscal and financial agents 
(Federal Reserve Banks and certain chartered depository financial 
institutions, respectively) in its ACH payments and collections 
operations, those entities are not providing services in a capacity as 
Third-Party Senders. Accordingly, the rule will not affect the Federal 
government. We are incorporating in Part 210 the Third-Party Sender 
Rule.

B. 2018 NACHA Operating Rules & Guidelines Book (2018 Rules Book) 
Changes

    Nacha did not publish any new rules in the 2018 Rules Book. The 
2018 Rule Book contains revisions related to the implementation of 
Phase 2 of Same Day ACH, which we adopted in 2017 (See 82 FR 42597), 
and the Third-Party Sender Rule discussed in Section A above.

C. 2019 NACHA Operating Rules & Guidelines Book (2019 Rules Book) 
Changes

    The 2019 Rules Book contains changes related to the following 
amendments:

[[Page 15717]]

     Faster Funds Availability;
     Same Day ACH Dollar Limit Increase; and
     New Same Day ACH Processing Window.
    In the Final Rule we are adopting all three of these amendments to 
the 2019 Rules Book in Part 210, as follows:
1. Faster Funds Availability
    The Faster Funds Availability rule will provide faster funds 
availability for many ACH credits. Funds from Same Day ACH credits 
processed in the first Same Day processing window will be made 
available to the Receiver for withdrawal by 1:30 p.m., Receiving 
Depository Financial Institution (RDFI) local time. Funds from all non-
Same Day ACH credits that are made available to the RDFI by 5:00 p.m., 
RDFI local time, on the banking day before Settlement Date will be 
available to the Receiver for withdrawal by 9:00 a.m., RDFI local time, 
on Settlement Date.
    Previously, funds from non-Same Day ACH credits were required to be 
made available to the Receiver for withdrawal by the end of the 
Settlement Date, which could be at any hour before the RDFI's close of 
business or by the end of day at an ATM. One exception was for 
Prearranged Payment and Deposit (PPD) credits made available to the 
RDFI by 5:00 p.m., RDFI local time, on the banking day before 
Settlement Date. The RDFI was required to provide funds availability 
for these credits by the opening of business on Settlement Date. This 
exception is now the standard practice for any ACH credit made 
available to the RDFI by 5:00 p.m., RDFI local time, on the banking day 
before Settlement Date. This rule change also establishes a firm time 
of 9:00 a.m., RDFI local time, for such availability and eliminates 
references to ``opening of business.''
    Receivers will have earlier funds availability for a large portion 
of ACH credits:
     Funds from non-Same Day ACH credits made available to the 
RDFI by 5:00 p.m., RDFI local time, on the banking day before 
settlement will be available to the Receiver for withdrawal on 
Settlement Date by 9:00 a.m., RDFI local time;
     Funds from Same Day credits received in the first Same Day 
ACH processing window will be available to the Receiver for withdrawal 
by 1:30 p.m., RDFI local time; and
     Funds from Same Day credits received in the second Same 
Day ACH processing window will be available to the Receiver for 
withdrawal by 5:00 p.m., RDFI local time.
    This NACHA rule became effective on September 20, 2019. We are 
accepting this amendment. Because the government is not a depository 
institution, the rule will not affect the government's receipt of ACH 
payments, but will mean that some recipients of government Same Day and 
non-Same Day ACH payments will have earlier access to their funds from 
their financial institutions.
2. Same Day ACH Dollar Limit Increase
    The Same Day ACH Dollar Limit Increase rule will increase the per-
transaction dollar limit for Same Day transactions from $25,000 to 
$100,000. At implementation, both Same Day ACH credits and Same Day ACH 
debits will be eligible for Same Day processing up to $100,000 per 
transaction. Nacha's rule is effective on March 20, 2020.
    We are accepting this rule, which will enable individuals and 
entities to make Same Day ACH payments of up to $100,000 to the 
government, and will enable Federal agencies to make Same Day ACH 
payments of up to $100,000.
3. New Same Day ACH Processing Window
    The New Same Day ACH Processing Window rule will create a new 
processing window that will enable ODFIs and their customers to 
originate Same Day transactions for an additional two hours each 
banking day. The new window will allow Same Day ACH files to be 
submitted to the ACH Operators until 4:45 p.m. ET. RDFIs will receive 
files from this third window by 5:30 p.m. ET, with interbank settlement 
occurring at 6:00 p.m. ET. RDFIs will need to make funds available for 
credits processed in the new window by the end of their processing for 
that Settlement Date. All credits and debits, and all returns, will be 
eligible to be processed in the new Same Day ACH window, with the 
exception of International ACH Transactions (IATs), Automated 
Enrollment Entries (ENRs), and forward entries in excess of the per-
transaction dollar limit.
    Currently, ODFIs can submit Same Day ACH files to the ACH Operators 
until 2:45 p.m. ET. ODFI processing arrangements that use payment 
processors and correspondent institutions have earlier deadlines. ACH 
end-users may have even earlier deadlines to submit Same Day ACH files 
to their ODFIs. These timing requirements can make it impractical for 
many ODFIs to offer, or for ACH end-users to adopt, Same Day ACH 
payments. Adding a third, later Same Day ACH processing window will 
provide greater access for all ODFIs and their customers.
    Nacha's rule is effective on March 19, 2021. We are accepting this 
rule, which will give more individuals and entities the opportunity to 
pay the government by Same Day ACH. It will also make it possible for 
the government to originate Same Day ACH payments later in the day than 
is currently possible.

D. Supplement #2-2018 to the NACHA Operating Rules Changes

    On November 2, 2018, the NACHA Voting Membership approved nine 
amendments to the NACHA Operating Rules. Because the nine amendments 
were approved just prior to publication of the 2019 Rules Book, the 
amendments are included in the rule book as a separate supplement 
rather than within the main body of the publication.
1. Return for Questionable Transaction
    Before adoption of this amendment, an RDFI could return an ACH 
entry for any reason, except as otherwise provided in Article Three, 
Subsection 3.8.1 (Restrictions on RDFI's Right to Transmit Return 
Entries) of the NACHA Operating Rules. Defined return reasons included, 
among others, entries that were deemed unauthorized by the Receiver or 
those with an invalid account number or no account at the RDFI. If an 
RDFI wanted to return an entry that did not have a valid account number 
and appeared to be questionable, suspicious, or anomalous in some way, 
the RDFI did not have a defined return reason code to communicate this 
information to the ODFI and Originator. NACHA guidance allowed RDFIs to 
use reason code R17 to return questionable transactions that would 
otherwise be returned using a standard administrative return reason 
(R03--No Account/Unable to Locate Account or R04--Invalid Account 
Number Structure). However, none of these options enabled an ODFI or 
its Originator to differentiate questionable transactions from other 
routine account number errors.
    Under the Return for Questionable Transaction rule, RDFIs are able 
(but not required) to use Return Reason Code R17--File Record Edit 
Criteria to indicate that the RDFI believes the entry containing 
invalid account information was initiated under questionable 
circumstances. This use of R17 is optional at the discretion of the 
RDFI. Those RDFIs that elect to use R17 for this purpose are required 
to use the description ``QUESTIONABLE' in the Addenda Information field 
of the return. This description in an R17 return

[[Page 15718]]

differentiates returns that appear to be suspicious to the RDFI from 
those due to routine account number issues.
    This rule became effective on June 21, 2019. We are accepting this 
amendment, which may give agencies greater insight into transactions 
that are returned because they are suspicious or questionable.
2. Supplementing Fraud Detection Standards for WEB Debits
    Under existing rules, Originators of internet-initiated (WEB) debit 
entries must use a ``commercially reasonable fraudulent transaction 
detection system'' to screen WEB debits for fraud. This requirement is 
intended to help prevent fraudulent payments from being introduced into 
the ACH Network, and to help protect RDFIs from posting fraudulent or 
otherwise incorrect or unauthorized payments.
    With the implementation of the Supplementing Fraud Detection 
Standards for WEB Debits rule, the current screening requirement will 
be enhanced to make it explicit that ``account validation'' is part of 
a ``commercially reasonable fraudulent transaction detection system.'' 
The supplemental requirement applies to the first use of an account 
number, or changes to the account number. For existing WEB debit 
authorizations, the rule will be effective on a going-forward basis. 
Originators will have to perform account validations as there are 
updates to account numbers in existing authorizations.
    NACHA's rule is effective on March 19, 2021. We are accepting this 
rule, which can be expected to reduce unauthorized debits originated by 
agencies and resulting fraud losses to the government. However, the 
implementation of account validation will be costly for the government 
due to the need for systems changes, program changes at originating 
Federal agencies, and transactional fees for validation services 
incurred for the origination of WEB debits. Acceptance of the rule will 
result in significant additional costs to the government in the 
origination of WEB debits but could also have the unintended 
consequence of providing an incentive for agencies to encourage or 
restrict the public to use payment methods other than ACH that 
represent lower cost to the government or offer greater transaction 
certainty at a comparable cost. Given the anticipated costs of 
implementation, we are delaying the effective date of our acceptance of 
this NACHA rule change to March 19, 2022. We will work toward 
implementing this rule in the next two years and expect several of our 
systems to comply prior to the 2022 date.
3. Supplementing Data Security Requirements
    The existing ACH Security Framework requires Financial 
Institutions, Originators, Third-Party Service Providers, and Third-
Party Senders to establish, implement and update security policies, 
procedures and systems related to the initiation, processing and 
storage of ACH entries. These policies, procedures, and systems must 
protect the confidentiality and integrity of protected information; 
protect against anticipated threats or hazards to the security or 
integrity of Protected Information; and protect against unauthorized 
use of Protected Information that could result in substantial harm to a 
natural person.
    The Supplementing Data Security Requirements rule expands the 
existing ACH Security Framework to explicitly require large, non-
financial institution Originators, Third-Party Service Providers, and 
Third-Party Senders to protect account numbers used in the initiation 
of ACH entries by rendering them unreadable when stored electronically. 
The rule aligns with existing language contained in Payment Card 
Industry (PCI) requirements, thus industry participants are expected to 
be reasonably familiar with the manner and intent of the requirement.
    The rule applies only to account numbers collected for or used in 
ACH transactions and does not apply to the storage of paper 
authorizations. The rule also does not apply to depository financial 
institutions when acting as internal Originators, as they are covered 
by existing Federal Financial Institutions Examination Council (FFIEC) 
and similar data security requirements and regulations.
    The amendment has a phased implementation period, with the 
following effective dates:
     Phase 1: NACHA Operating Rules language is effective on 
June 30, 2020. Any Originator, Third-Party Service Provider, or Third-
Party Sender that originates six million or more ACH transactions in 
calendar year 2019 will need to be compliant by June 30, 2020.
     Phase 2: NACHA Operating Rules language will become 
effective on June 30, 2021. Any Originator, Third-Party Service 
Provider, or Third-Party Sender that originates two million or more ACH 
transactions in calendar year 2020 will need to be compliant by June 
30, 2021.
    Going forward after calendar year 2020, any Originator, Third-Party 
Service Provider, or Third-Party Sender that originates two million or 
more ACH transactions in any calendar year will need to be compliant 
with the rule by June 30 of the following calendar year.
    Fiscal Service supports the expansion of existing security 
requirements to require large non-financial institution Originators to 
protect account numbers used to initiate ACH transactions by rendering 
them unreadable while stored electronically. We are accepting this 
amendment.
4. ACH Rules Compliance Audit Requirements
    Effective January 1, 2019 Nacha consolidated all requirements for 
an annual rules compliance audit within one section of the NACHA 
Operating Rules. Prior to the rule change, the general obligation for 
Participating Depository Financial Institutions (and certain Third-
Party Service Providers and Third-Party Senders) to conduct an audit 
was located within Article One, Section 1.2.2 (Audits of Rules 
Compliance). However, the details pertaining to that audit obligation 
were separately located within Appendix Eight (Rules Compliance Audit 
Requirements). This amendment retained and combined the core audit 
obligation with the general administrative requirements for completion 
of such an audit into Article One of the NACHA Operating Rules.
    Under current 31 CFR 210.2(d), the rule enforcement and compliance 
audit requirements are not applicable to Federal agencies. We are 
therefore not adopting this amendment.
5. Minor Rules Topics
    These amendments change five specific areas of the NACHA Operating 
Rules to address minor issues. Minor changes to the NACHA Operating 
Rules have little-to-no impact on ACH participants and no significant 
economic impact. NACHA's minor rule amendments became effective on 
January 1, 2019.
i. ACH Operator Edits
    The ACH Operator Edits amendment modifies edit criteria to permit 
ACH Operators to ``pend'' files as an alternative to rejecting files 
under various error conditions, primarily related to duplicate file 
detection. The rule incorporates language to clarify that ACH Operator 
edits defined within Appendix Two of the NACHA Operating Rules 
represent minimum standards required by the NACHA Operating Rules, and 
that additional edits can be adopted by each ACH Operator as part of 
its service agreement with its customers.
    We are accepting this amendment.

[[Page 15719]]

ii. Clarification of Telephone-Initiated Entry (TEL) Authorization 
Requirements
    This amendment clarifies that the general rules governing the form 
of authorization for all consumer debits apply to the authorization of 
TEL entries, including the obligation to include revocation language. 
Only Accounts Receivable (ARC), Back Office Conversion (BOC), Point-of-
Purchase (POP), and Re-presented Check (RCK) entries are explicitly 
exempted from the requirement to include revocation language in the 
authorization. The Clarification of TEL Authorization Requirements rule 
also incorporates a reference that TEL entries are consumer debits 
only, consistent with the language for other consumer debits.
    We are accepting this amendment.
iii. Clarification of RDFI Obligation To Return Credit Entry Declined 
by Receiver
    This rule change reflects pre-existing practices regarding 
circumstances under which an RDFI is, or is not, obligated to return a 
credit entry that has been declined by a Receiver. The Clarification of 
RDFI Obligation to Return Credit Entry Declined by Receiver rule 
expressly identifies specific conditions under which the RDFI is 
excused from its obligation to return a credit:

--There are insufficient funds available to satisfy the return, 
including due to any third party lien or security interest.
--The return is prohibited by legal requirements.
--The RDFI itself has a claim against the proceeds of the credit entry, 
including by offset, lien, or security interest.

    The rule change also modifies the rule language to refer to an 
entry being ``declined'' (rather than ``refused'') by the Receiver.
    We are accepting this amendment.
iv. Clarification on Reinitiation of Return Entries
    This amendment is an editorial change to the language of the 
general rule on Reinitiated Entries to clarify the intent of the Rules 
that reinitiation is limited to two times.
    We are accepting this amendment.
v. Clarification on RDFI Liability Upon Receipt of a Written Demand for 
Payment
    This amendment contains editorial changes regarding conditions 
under which an RDFI may return a Reclamation Entry or reject a Written 
Demand for Payment. These changes also clarify that an RDFI may reject 
a Written Demand for Payment only if it was not properly originated by 
the ODFI.
    We are accepting this amendment.

E. Differentiating Unauthorized Return Reasons

    On April 12, 2019, NACHA Voting Membership approved Ballot #1-2019: 
Differentiating Unauthorized Return Reasons. The rule repurposes an 
existing, little-used return reason code (R11) that will be used when a 
receiving customer claims that there was an error with an otherwise 
authorized payment. Currently, return reason code R10 is used as a 
catch-all for various types of underlying unauthorized return reasons, 
including some for which a valid authorization exists, such as a debit 
on the wrong date or for the wrong amount. In these types of cases, a 
return of the debit still should be made, but the Originator and its 
customer (the Receiver) might both benefit from a correction of the 
error rather than the termination of the origination authorization. The 
use of a distinct return reason code (R11) enables a return that 
conveys this new meaning of ``error'' rather than ``no authorization.''
    The rule becomes effective in two phases. On April 1, 2020, the re-
purposed return code becomes effective, and financial institutions will 
use it for its new purpose. A year later, on April 1, 2021, the re-
purposed return code will become covered by the existing Unauthorized 
Entry Fee.
    We are accepting this amendment.

F. Actual or Constructive Knowledge of Death

    31 CFR part 210 subpart B governs the reclamation of post-death 
Federal benefit payments from financial institutions. Under Subpart B, 
both agencies and RDFIs have obligations, rights and liabilities that 
are triggered by actual or constructive knowledge of the death or 
incapacity of a recipient or death of a beneficiary. See Sec.  
210.10(c), (d); Sec.  210.11(a). An agency that initiates a request for 
a reclamation must do so within 120 calendar days after the date that 
the agency first has actual or constructive knowledge of the death or 
legal incapacity of a recipient or the death of a beneficiary. However, 
the definition of ``actual or constructive'' knowledge for this purpose 
is not explicitly addressed in the definition at Sec.  210.2(b), which 
refers only to RDFIs.
    Fiscal Service is revising the definition of ``actual or 
constructive knowledge of death'' at 31 CFR 210.2(b) to apply the 
definition to agencies as well as RDFIs. In addition, we are adding a 
sentence to the definition to address a specific situation that has 
arisen in recent years in which agencies sometimes stop recurring 
payments to a recipient and, many months or years after stopping the 
payments, initiate a reclamation. As revised, Sec.  210.2(b) requires 
an agency that stops certifying recurring payments to a recipient 
because it has reason to believe that the recipient is deceased to 
investigate and determine whether to initiate a reclamation within 120 
days following the first missed payment date. An agency may receive 
information or otherwise have reason to believe that a recipient is 
deceased before it takes action to stop payments. However, we believe 
that the first missed recurring payment date preceding the initiation 
of a reclamation is the most apparent indicator that the agency has 
information of a recipient's death that is sufficiently reliable to 
warrant stopping payments. Accordingly, the phrase ``the time [the 
agency] stops certifying recurring payments to a recipient'' refers to 
the first missed payment date.
    The language would not generally apply to or affect situations in 
which agencies stop payments due to fraud or loss of entitlement 
because in most of those cases agencies would not be initiating a 
reclamation. In addition, the language would not generally affect 
situations in which an agency stops payments due to a mistaken belief 
that the recipient was deceased, because those payments would be 
reinitiated upon discovery of the mistake. Moreover, in the event that 
an agency initiates a reclamation more than 120 days after stopping 
payments and can prove that it stopped payments for a reason other than 
actual or constructive knowledge of death, the agency can present 
evidence to rebut the presumption of knowledge, in which case the 120-
day deadline would not be triggered by the date the agency stopped 
payments.
    Agencies have indicated that sometimes they have difficulty 
obtaining definitive proof of death (i.e., a death certificate) within 
120 days of receiving constructive knowledge of death, and that 
therefore they may wait for a protracted period of time before 
initiating a reclamation. However, the legal standard applicable to 
agencies initiating a reclamation is not receipt of a death certificate 
(actual knowledge), but actual or constructive knowledge. We requested 
comment on this revision. Both commenters supported this change, which 
we are adopting in the final rule.

[[Page 15720]]

IV. Section-by-Section Analysis

    In order to incorporate in Part 210 the NACHA Operating Rule 
changes that we are accepting, we are replacing references to the 2016 
NACHA Rules & Guidelines book with references to the 2019 NACHA 
Operating Rules & Guidelines book. The NACHA Operating Rule amendment 
that we are not incorporating is a modification to the audit compliance 
provisions of the NACHA Operating Rules, which are already excluded 
under Part 210. Other than replacing the references to the 2016 NACHA 
Operating Rules & Guidelines book, no change to Part 210 is necessary 
to exclude this amendment.

Sec.  210.2(b)

    We are amending the definition of ``actual or constructive 
knowledge'' in order to clarify that the definition applies to agencies 
as well as to RDFIs. We are also adding a sentence to the definition to 
address situations in which agencies stop recurring payments to a 
recipient and subsequently initiate a reclamation. Under the revised 
definition, an agency is presumed to have constructive knowledge of 
death or incapacity at the time it stops certifying recurring payments 
to a recipient if the agency (1) does not re-initiate payments to the 
recipient and (2) subsequently initiates a reclamation for one or more 
payments made to the recipient. The presumption created under the 
definition is rebuttable in cases where an agency can demonstrate that 
it stopped certifying recurring payments to a recipient for a reason 
other than death.

Sec.  210.2(d)

    We are amending the definition of ``applicable ACH Rules'' at Sec.  
210.2(d) by replacing the reference to NACHA's 2016 Operating Rules & 
Guidelines with a reference to the ACH Rules with an effective date on 
or before June 30, 2021, as published in ``2019 NACHA Operating Rules & 
Guidelines.'' We are deleting the reference to Appendix Ten in 
subparagraph (1) because Appendix Eight is being removed in its 
entirety from the 2019 Rules Book, and Appendices Nine and Ten are 
being renumbered as Appendices Eight and Nine, respectively. We are 
deleting existing paragraph (7), which relates to the government's 
original adoption of Same Day ACH in 2017, because it was in effect 
only until September 15, 2017, and is now obsolete. We are adding a new 
paragraph (7), which exempts the government from the Fraud Detection 
Standards for WEB debits until March 19, 2022.

Sec.  210.3(b)

    We are amending Sec.  210.3(b) by replacing the references to the 
2016 NACHA Operating Rules & Guidelines with references to a 2019 NACHA 
Operating Rules & Guidelines.

Sec.  210.6

    We are amending paragraph (g) by replacing the reference to the 
2016 NACHA Operating Rules & Guidelines with a reference to a 2019 
NACHA Operating Rules & Guidelines.

Sec.  210.10(b)

    We are amending Sec.  210.10(b) to state that an agency is presumed 
to have constructive knowledge of death or incapacity at the time it 
stops certifying recurring payments to a recipient if the agency (1) 
does not re-initiate payments to the recipient and (2) subsequently 
initiates a reclamation for one or more payments made to the recipient.

V. Incorporation by Reference

    The 2019 NACHA Operating Rules & Guidelines are incorporated by 
reference into Part 210 with the approval of the Director of the 
Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. The Office of 
Federal Register (OFR) regulations require that agencies discuss in the 
preamble of a final rule ways that the materials the agency proposes to 
incorporate by reference are reasonably available to interested parties 
or how it worked to make those materials reasonably available to 
interested parties. In addition, the preamble of the final rule must 
summarize the material. 1 CFR 51.5(a). In accordance with OFR's 
requirements, the discussion in the Supplementary Information section 
summarizes the 2019 NACHA Operating Rules. Financial institutions 
utilizing the ACH Network are bound by the NACHA Operating Rules and 
have access to the NACHA Operating Rules in the course of their 
everyday business. All approved material is available as a bound book 
or in online form from NACHA, 2550 Wasser Terrace, Suite 400, Herndon, 
Virginia 20171, tel. 703-561-1100, [email protected].

VI. Procedural Analysis

Regulatory Planning and Review

    The final 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 final rule will not have a 
significant economic impact on a substantial number of small entities. 
The final rule imposes on the Federal government a number of changes 
that Nacha has already adopted and imposed on private sector entities 
that utilize the ACH Network. The final rule does not impose any 
additional burdens, costs or impacts on any private sector entities, 
including any 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 final rule will not result in expenditures by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year. Accordingly, 
we have not prepared a budgetary impact statement or specifically 
addressed any regulatory alternatives.

List of Subjects in 31 CFR Part 210

    Automated Clearing House, Electronic funds transfer, Financial 
institutions, Fraud, Incorporation by reference.

Words of Issuance

0
For the reasons set out in the preamble, amend 31 CFR part 210 to read 
as follows:

PART 210--FEDERAL GOVERNMENT PARTICIPATION IN THE AUTOMATED 
CLEARING HOUSE

0
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.


0
2. In Sec.  210.2, revise paragraphs (b) and (d) to read as follows:


Sec.  210.2  Definitions.

* * * * *

[[Page 15721]]

    (b) Actual or constructive knowledge, when used in reference to an 
RDFI's or agency's knowledge of the death or incapacity of a recipient 
or death of a beneficiary, means that the RDFI or agency received 
information, by whatever means, of the death or incapacity and has had 
a reasonable opportunity to act on such information or that the RDFI or 
agency would have learned of the death or incapacity if it had followed 
commercially reasonable business practices. For purposes of subpart B 
of this part, an agency is presumed to have constructive knowledge of 
death or incapacity at the time it stops certifying recurring payments 
to a recipient if the agency:
    (1) Does not re-initiate payments to the recipient; and
    (2) Subsequently initiates a reclamation for one or more payments 
made to the recipient.
* * * * *
    (d) Applicable ACH Rules means the ACH Rules with an effective date 
on or before June 30, 2021, as published in the 2019 NACHA Operating 
Rules and Guidelines (incorporated by reference, see Sec.  210.3(b)), 
except:
    (1) Subsections 1.2.2, 1.2.3, 1.2.4, 1.2.5 and 1.2.6; Appendix 
Seven; Appendix Eight; and Appendix Nine (governing the enforcement of 
the ACH Rules and claims for compensation);
    (2) Section 2.10 and section 3.6 (governing the reclamation of 
benefit payments);
    (3) The requirement in Appendix Three that the Effective Entry Date 
of a credit entry be no more than two Banking Days following the date 
of processing by the Originating ACH Operator (see definition of 
``Effective Entry Date'' in Appendix Three);
    (4) Section 2.2 (setting forth ODFI obligations to enter into 
agreements with, and perform risk management relating to, Originators 
and Third-Party Senders) and section 1.6 (Security Requirements);
    (5) Section 2.17.2.2-2.17.2.6 (requiring reduction of high rates of 
entries returned as unauthorized);
    (6) The requirements of Section 2.5.8 (International ACH 
Transactions) shall not apply to entries representing the payment of a 
Federal tax obligation by a taxpayer; and
    (7) Until March 19, 2022, the requirement of section 2.5.17.4(a) 
that the Originator utilize a fraudulent transaction detection system 
that validates an account to be debited for the first use of such 
account number and for any subsequent change(s) to the account number.
* * * * *

0
3. In Sec.  210.3, revise paragraph (b) to read as follows:


Sec.  210.3  Governing law.

* * * * *
    (b) Incorporation by reference. Certain material is incorporated by 
reference in this part with the approval of the Direct of the Federal 
Register under 5 U.S.C. 552(a) and 1 CFR part 51. To enforce any 
edition other than that specified in this section the Service must 
publish a document in the Federal Register and the material must be 
available to the public. All approved material is available for 
inspection at the Bureau of the Fiscal Service, 401 14th Street SW, 
Room 400A, Washington, DC 20227, ph. 202 874-6680, and it is available 
from the sources listed below. It is also available for inspection at 
the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, email 
[email protected] or go to www.archives.gov/federal-register/cfr/ibr-locations.html.
    (1) NACHA, 2550 Wasser Terrace, Suite 400, Herndon, Virginia 20171, 
tel. 703-561-1100, [email protected]
    (i) 2019 NACHA Operating Rules & Guidelines: The Guide to the Rules 
Governing the ACH Network, copyright 2019 (2019 NACHA Operating Rules 
and Guidelines).
    (ii) [Reserved]
    (2) [Reserved]
* * * * *

0
4. In Sec.  210.6, revise paragraph (g) to read as follows:


Sec.  210.6  Agencies.

* * * * *
    (g) Point-of-purchase debit entries. An agency may originate a 
Point-of-Purchase (POP) entry using a check drawn on a consumer or 
business account and presented at a point-of-purchase. The requirements 
of the 2019 NACHA Operating Rules and Guidelines, incorporated by 
reference, see Sec.  210.3(b), 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.
* * * * *

0
5. In Sec.  210.10, revise paragraph (b) to read as follows:


Sec.  210.10   RDFI liability.

* * * * *
    (b) Actual or Constructive Knowledge of Death. Actual or 
constructive knowledge, when used in reference to an RDFI's or agency's 
knowledge of the death or incapacity of a recipient or death of a 
beneficiary, means that the RDFI or agency received information, by 
whatever means, of the death or incapacity and has had a reasonable 
opportunity to act on such information or that the RDFI or agency would 
have learned of the death or incapacity if it had followed commercially 
reasonable business practices. For purposes of this subpart, an agency 
is presumed to have constructive knowledge of death or incapacity at 
the time it stops certifying recurring payments to a recipient if the 
agency:
    (1) Does not re-initiate payments to the recipient; and
    (2) Subsequently initiates a reclamation for one or more payments 
made to the recipient.
* * * * *

David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2020-04992 Filed 3-18-20; 8:45 am]
 BILLING CODE 4810-AS-P