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Proposed Rule2021-17268

Federal Government Participation in the Automated Clearing House

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Published

August 19, 2021

Issuing agencies

Treasury DepartmentFiscal Service

Abstract

The Department of the Treasury, Bureau of the Fiscal Service (Fiscal Service) is proposing to amend its regulation governing the use of the Automated Clearing House (ACH) Network by Federal agencies. Our regulation adopts, with some exceptions, the Operating Rules Operating Guidelines (Operating Rules & Guidelines) developed by Nacha as the rules governing the use of the ACH Network by Federal agencies. We are issuing this proposed rule to address changes that Nacha has made since the publication of the 2019 Operating Rules & Guidelines. These changes include amendments set forth in the 2020 and 2021 Operating Rules & Guidelines, including supplements thereto, issued on or before March 31, 2021.

Full Text

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<title>Federal Register, Volume 86 Issue 158 (Thursday, August 19, 2021)</title>
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[Federal Register Volume 86, Number 158 (Thursday, August 19, 2021)]
[Proposed Rules]
[Pages 46631-46636]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-17268]

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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 210

RIN 1530-AA26

Federal Government Participation in the Automated Clearing House

AGENCY: Fiscal Service, Bureau of the Fiscal Service, Treasury.

ACTION: Notice of proposed rulemaking with request for comment.

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SUMMARY: The Department of the Treasury, Bureau of the Fiscal Service
(Fiscal Service) is proposing to amend its regulation governing the use
of the Automated Clearing House (ACH) Network by Federal agencies. Our
regulation adopts, with some exceptions, the Operating Rules Operating
Guidelines (Operating Rules & Guidelines) developed by Nacha as the
rules governing the use of the ACH Network by Federal agencies. We are
issuing this proposed rule to address changes that Nacha has made since
the publication of the 2019 Operating Rules & Guidelines. These changes
include amendments set forth in the 2020 and 2021 Operating Rules &
Guidelines, including supplements thereto, issued on or before March
31, 2021.

DATES: Comments on the proposed rule must be received by October 18,
2021.

ADDRESSES: Comments on this rule, identified by docket FISCAL-2021-
0002, should only be submitted using the following methods:
<bullet> Federal eRulemaking Portal: <a href="http://www.regulations.gov">www.regulations.gov</a>. Follow
the instructions on the website for submitting comments.
<bullet> Mail: Ian Macoy, Bureau of the Fiscal Service, 3201 Pennsy
Drive, Building E, Landover, MD 20785.
The fax and email methods of submitting comments on rules to Fiscal
Service have been decommissioned.
Instructions: All submissions received must include the agency name
(Bureau of the Fiscal Service) and docket number FISCAL-2021-0002 for
this rulemaking. In general, comments received will be published on
<a href="http://Regulations.gov">Regulations.gov</a> without change, including any business or personal
information provided. Comments received, including attachments and
other supporting materials, are part of the public record and subject
to public disclosure. Do not disclose any information in your comment
or supporting materials that you consider confidential or inappropriate
for public disclosure. You can download this proposed rule at the
following website: <a href="https://www.fiscal.treasury.gov/ach/">https://www.fiscal.treasury.gov/ach/</a>.
In accordance with the U.S. government's eRulemaking Initiative,
Fiscal Service publishes rulemaking information on <a href="http://www.regulations.gov">www.regulations.gov</a>.
<a href="http://Regulations.gov">Regulations.gov</a> offers the public the ability to comment on, search,
and view publicly available rulemaking materials, including comments
received on rules.

FOR FURTHER INFORMATION CONTACT: Ian Macoy, Director of Settlement
Services, at (202) 874-6835 or <a href="/cdn-cgi/l/email-protection#cba2aaa5e5a6aaa8a4b28bada2b8a8aaa7e5bfb9aeaab8beb9b2e5aca4bd">[email&#160;protected]</a>; or Frank
J. Supik, Senior Counsel, at <a href="/cdn-cgi/l/email-protection#06607467686d287573766f6d46606f7565676a28727463677573747f28616970">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

[[Page 46632]]

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 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.
The ACH Network facilitates payment transactions between several
participants. These participants include the:
<bullet> Originator: A company or individual that agrees to
initiate an ACH entry according to an arrangement with a Receiver.
<bullet> Originating Depository Financial Institution (ODFI): An
institution that receives the payment instruction from the Originator
and forwards the ACH entry to the ACH Operator.
<bullet> ACH Operator: A central clearing facility that receives
entries from ODFIs, distributes the entries to appropriate Receiving
Depository Financial Institutions, and performs settlement functions
for the financial institutions.
<bullet> Receiving Depository Financial Institution (RDFI): An
institution that receives entries from the ACH Operator and posts them
to the account of its depositors (Receivers).
<bullet> Receiver: An organization or consumer that has authorized
an Originator to initiate an ACH entry to the Receiver's account with
the RDFI.
<bullet> Third-Party Service Provider: An entity other than the
Originator, ODFI, or RDFI that performs any functions on behalf of the
Originator, ODFI, or RDFI in connection with processing ACH entries.
These functions may include, for example, creating ACH files on behalf
of an Originator or ODFI, or acting as a sending point or receiving
point on behalf of an ODFI or RDFI.
Rights and obligations among participants in the ACH Network are
governed by Nacha's Operating Rules & Guidelines. The Operating Rules &
Guidelines establish standards for sending and receiving ACH entries,
provide specifications for the electronic transmission of transaction
information, set forth the rights and obligations of the entities
listed above when transmitting, receiving or returning ACH entries, and
cover other related matters. The Operating Rules & Guidelines also
provide guidance regarding best practices to ACH Network participants.
There is an industry consensus that the Operating Rules & Guidelines
provide a uniform set of standards for ACH transactions and that these
standards enable efficient transaction processing.
Part 210 incorporates the Operating Rules & Guidelines by
reference, with certain exceptions. From time to time, the Fiscal
Service amends Part 210 to address changes that Nacha periodically
makes to the Operating Rules & Guidelines or to revise the regulation
as otherwise appropriate. Given their coverage across the payment
system and to ensure consistent application to all ACH Network
participants, the Federal Government generally adopts changes to the
Operating Rules & Guidelines unless the changes address enforcement and
compliance of the Operating Rules & Guidelines, would adversely impact
government operations, or are irrelevant to Federal agency
participation in the ACH Network.
Currently, Part 210 incorporates the 2019 Operating Rules &
Guidelines, subject to certain exceptions. Nacha has adopted several
changes since the publication of the 2019 Operating Rules & Guidelines,
as reflected in the 2021 Operating Rules & Guidelines and supplements
thereto.\1\ We are proposing to incorporate in Part 210 most, but not
all, of these changes.
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\1\ The 2021 Operating Rules & Guidelines also incorporates
changes that Nacha previously adopted and incorporated into the 2020
Operating Rules & Guidelines. This Notice of Proposed Rulemaking
also highlights applicable changes to the Operating Rules &
Guidelines that were incorporated into the 2020 Operating Rules &
Guidelines.
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We are requesting public comment on all the proposed amendments to
Part 210.

II. Summary of Proposed Rule Changes

Since the publication of the 2019 Operating Rules & Guidelines,
Nacha published two versions of the Operating Rules & Guidelines, the
2020 Operating Rules & Guidelines and the 2021 Operating Rules &
Guidelines. Below, we outline the major changes that were published in
these updates.

A. 2020 Operating Rules & Guidelines Changes

The 2020 Operating Rules & Guidelines proposed several changes to
the Operating Rules and Guidelines. These changes included raising the
Same Day ACH dollar limit, differentiating the codes associated with
certain return transactions, modifying data security requirements,
clarifying fraud detection standards for WEB Debit transactions, and
adding a new Same Day ACH processing window.
Same Day ACH Dollar Limit Increase
On March 31, 2021, Nacha approved a rule change to update the Same
Day ACH per-transaction dollar limit from $100,000 to $1,000,000. At
implementation, both Same Day ACH credits and Same Day ACH debits will
be eligible for Same Day ACH processing up to $1,000,000 per
transaction. Nacha's rule will become effective on March 18, 2022 for
all non-Federal Government ACH Network participants.
We propose to adopt this rule, effective March 18, 2022. Acceptance
of this rule will enable individuals and entities to make Same-Day ACH
payments of up to $1,000,000 to the government and will enable Federal
payments in the same amount. Failure to adopt this rule at the same
time as other ACH Network participants may prevent clearance and
processing of certain high-value transactions. For example, a taxpayer
would be unable to make a tax payment exceeding $100,000 to the Federal
Government via Same-Day ACH, even though it could initiate a similarly-
sized Same-Day ACH payment to a private party. The failed transaction
and resulting confusion could negatively impact both the taxpayer and
the Federal Government.
Differentiating Unauthorized Return Codes
The 2020 Operating Rules & Guidelines changed the usage of certain
Nacha ``Return Reason Codes,'' which afforded financial institutions
more insight into the reason why a transaction was returned.
Under the prior rules, Nacha used one Return Reason Code (the R10
code) as a catch-all to identify transactions that were returned for
several underlying return reasons, including some for which a valid
authorization existed. Under the revised Rule, Nacha re-purposed
another Return Reason Code (the R11 code) to allow ACH network
participants to more readily identify ACH transactions that are being
returned due to an error, even though an authorization exists for the
transaction (e.g., if the authorization is for a different amount and/
or date). The newly re-purposed code is used only to identify the
return of a debit transaction in which there is an error, but for which
there is an authorization.\2\
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\2\ The 2021 Operating Rules & Guidelines implements a second
phase of this rule. This second phase is discussed below.
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The Operating Rules & Guidelines will treat returned transactions
using either code (R10 and R11) as unauthorized. However, an Originator
will be permitted to correct the underlying error in an R11 return (if
possible). Subject to certain other requirements, the Originator may be

[[Page 46633]]

able to resubmit the underlying ACH transaction without obtaining a new
authorization.\3\
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\3\ Some transaction errors, such as errors due to the failure
to provide certain notices or the failure to use an acceptable
``source document,'' cannot be corrected. In those cases, the
Originator will be required to submit a new ACH entry.
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We propose to adopt this change. Doing so will allow the Fiscal
Service to remain consistent with industry practice, allowing for
consistent operation across the ACH network. Moreover, using the R11
return code will provide greater insight into the reasons for the
return of certain transactions.
Supplemental Fraud Detection Standards for WEB Debits
The Fiscal Service previously adopted Nacha's updated fraud
detection standards for WEB debit transactions.\4\ Fiscal Service
adopted this change with a delayed effective date of March 22, 2022.\5\
The updated rule clarifies that Nacha requirements for a ``commercially
reasonable fraudulent transaction detection system'' include the use of
account validation services for WEB debit transactions. We propose to
adopt the updated rule, which is non-controversial.
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\4\ See 85 FR 15,715 (Mar. 19, 2020).
\5\ Id.
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B. 2021 Operating Rules & Guidelines Changes

The 2021 Operating Rules & Guidelines implement several additional
changes beyond those in the 2020 Operating Rules & Guidelines. These
changes include, but are not limited to, clarifying certain portions of
the enforcement provisions of the Operating Rules & Guidelines,
implementing a new Same Day ACH processing window, implementing a
second phase of Nacha's return code rule, establishing a time limit on
certain warranty claims, and implementing Nacha's contact registry.

Enforcement

The 2021 Operating Rules & Guidelines defines an egregious
violation within the context of rules enforcement.
We are proposing to not adopt this amendment. Under 31 CFR
210.2(d), the enforcement provisions of the Operating Rules &
Guidelines are inapplicable to Federal agencies.

Differentiating Unauthorized Return Reasons

As discussed above, Nacha repurposed the R11 Return Reason code to
further differentiate between certain returned debit ACH transactions.
The 2021 Operating Rules & Guidelines implements a second phase of this
rule change, which will apply Nacha's existing Unauthorized Entry Fee
to ACH debit entries that are returned with the newly repurposed code.
As noted above, these transactions are associated with an authorization
of a debit transaction when there is an error or defect in the payment
such that the entry does not conform to the terms of the authorization.
The Fiscal Service proposes to adopt this rule change. Adoption of
this change maintains consistency with other ACH Network participants
and creates additional incentives them to minimize the amount of
unauthorized (or incorrectly authorized) ACH transactions.
Limitation on Warranty Claims
Nacha's 2021 Operating Rules & Guidelines impose time limits on an
RDFI's ability to make a claim against an ODFI's authorization
warranty.
The Operating Rules & Guidelines require an ODFI to warrant that an
ACH entry has been properly authorized by the Receiver. Under the prior
rules, there was no time limit on the ODFI's warranties. Instead, these
limits were determined by state statutes of limitations, which may
vary.
The change sets forth different time periods, depending upon
whether the transaction affects consumer and non-consumer accounts.
This rule allows an RDFI to make a claim for one year from the
settlement date of an entry to a non-consumer account. In the case of
an entry to a consumer account, the RDFI may make a claim for two years
from the entry's Settlement Date. In addition, the RDFI can make a
claim for entries settling within 95 calendar days from the Settlement
Date of the first unauthorized debit to a consumer account.
The Fiscal Service proposes to adopt this rule change. Adoption
will reduce the number of claims for older transactions, although
liability in some instances may be shifted to the Federal Government.
On balance, the Federal Government may benefit from uniform time limits
that allow the opportunity to assert warranty claims when applicable,
while also establishing firm time limits for asserting and defending
claims.
Supplementing Data Security Requirements
Nacha previously expanded its Data Security Requirements rule,
which the Fiscal Service adopted,\6\ but in the 2021 Operating Rules &
Guidelines Nacha updated the effective date of part of this rule to be
June 30, 2022. The rule expanded 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.
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\6\ See 85 FR 15,715 (Mar. 19, 2020).
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The Fiscal Service proposes to adopt the new effective date. The
Fiscal Service continues to support 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.
ACH Contact Registry
In April 2019, Nacha approved a rule creating an ACH contact
registry. Under this rule, all ACH financial institutions are required
to register contact information for their ACH operations and fraud and/
or risk management areas. Financial institutions may voluntarily
register contacts for additional personnel or departments at their
discretion. The contact information is available to other registered
ACH participating financial institutions, Payments Associations, ACH
Operators, and Nacha to use in the event of ACH-related system outages,
erroneous payments, duplicates, reversals, fraudulent payments and any
other use within scope, such as identifying the proper contact for
letters of indemnity. The contact information includes Routing and
Transit Numbers (RTNs).
Nacha is implementing the ACH Contact Registry rule in two phases.
Phase 1 became effective on July 1, 2020, the date on which the
registration portal was opened for ``Participating Depository Financial
Institutions'' to begin to submit and query contact information. Under
Phase 2, Nacha's enforcement authority for the Rule becomes effective.
We are proposing to not adopt this amendment. Although,
participation in the registry can be expected to provide some benefits
to the industry, all Federal Government RTNs are controlled by Treasury
through the Fiscal Service. Fiscal Service prohibits debit origination
to all Treasury-controlled ACH RTNs. To mitigate the risk of
inappropriate use of any Treasury RTNs, Treasury prohibits their
publication. Joining the registry will unnecessarily expose Treasury
RTNs to parties without a need to know that information. Moreover,
under 31 CFR

[[Page 46634]]

210.2(d), the enforcement provisions of the Operating Rules &
Guidelines are inapplicable to Federal agencies.
Reversals
The 2021 Operating Rules & Guidelines also clarify the proper
circumstances under which an ACH entry may be reversed. Currently, the
Operating Rules & Guidelines define a limited number of permissible
reasons for reversing entries; however, they do not explicitly address
improper uses of reversals. The amendments to the Operating Rules &
Guidelines will specifically state that the initiation of reversing
entries or files for any reason other than those explicitly permissible
under the Operating Rules & Guidelines is prohibited and define non-
exclusive examples of circumstances in which the origination of
Reversals is improper.
The reversals rule will also establish additional formatting
requirements for reversals; limit the ability to modify the contents of
other fields in a reversing entry to allow changes only to the extent
necessary to facilitate proper processing of the reversal; explicitly
permit an RDFI to return an improper reversal; and expand the
permissible reasons for a Reversing Entry to include an error in the
effective entry date.
The Fiscal Service proposes to adopt this rule. The rule will
clarify the circumstances under which entries can be reversed and
assist in the efficient processing of ACH transactions involving the
Federal Government.
Meaningful Modernization
The 2021 Operating Rules & Guidelines also contain five amendments
that Nacha characterizes as ``Meaningful Modernization.'' These five
amendments are designed to improve and simplify the ACH user experience
by facilitating the adoption of new technologies and channels for the
authorization and initiation of ACH payments; reducing barriers to use
of the ACH Network; providing clarity and increasing consistency around
certain ACH authorization processes; and reducing certain
administrative burdens related to ACH authorizations.
Specifically, the five rules will:
<bullet> Explicitly define the use of standing authorizations for
consumer ACH debits;
<bullet> Define and allow for oral authorization of consumer ACH
debits beyond telephone calls;
<bullet> Clarify and provide greater consistency of ACH
authorization standards across payment initiation channels;
<bullet> Reduce the administrative burden of providing proof of
authorization; and
<bullet> Better facilitate the use of electronic and oral Written
Statements of Unauthorized Debit.
Standing Authorizations
The current authorization framework for consumer ACH debits
encompasses recurring and single payments. Recurring payments occur at
regular intervals, with no additional action required by the consumer
to initiate the payment and are for the same or a similar amount. A
single entry is a one-time payment and can be between parties that have
no previous relationship. ACH Originators that have, or want to use, a
different model for ongoing commerce do not have specific rules for
payments that are a hybrid, falling somewhere in between recurring and
single entries.
This rule change will define a Standing Authorization as an advance
authorization by a consumer of future debits at various intervals. The
consumer would initiate the future debits by additional actions, which
differs from the requirements for recurring ACH transactions. The rule
will allow the use of different Standard Entry Class codes. By allowing
standing authorizations, Nacha proposes to fill the gap between single
and recurring payments and enable businesses and consumers to make more
flexible payment arrangements for relationships that are ongoing in
nature.
The Fiscal Service proposes adoption of the amendment. The Fiscal
Service believes that the Standing Authorization rule may increase
options for initiating ACH transactions with the Federal Government.
Although the Federal Government is not required to engage in Standard
Authorizations, adoption of this rule would allow agencies to adopt new
payment processes that better fit their needs, and the need of their
customers.
Oral Authorizations
The current authorization language in the Operating Rules &
Guidelines does not provide for oral authorizations of an ACH payment
outside of a telephone call. Only the Telephone-Initiated Entry (TEL)
Standard Entry Class Code has requirements to address the risks
specific to an oral authorization.
The Oral Authorizations rule will define and allow Oral
Authorizations as a valid authorization method for consumer debits
distinct from a telephone call. Nacha asserts that enabling the broader
use of Oral Authorizations will allow businesses to adopt ACH payments
in transactional settings that make use of verbal interactions and
voice-related technologies.
Under the rule, any oral authorization obtained via any channel
will need to meet the requirement of an ``oral authorization.'' An oral
authorization obtained over the internet that is not a telephone call
also will need to meet the risk and security requirements that
currently apply to internet-Initiated/Mobile (VEB) ACH entries. The
rule will allow for standing authorizations to be obtained orally. In
addition, the rule will allow for subsequent entries initiated under a
standing authorization to be initiated through voice commands,
instructions, or affirmations.
The Fiscal Service proposes adoption of the amendment. The Fiscal
Service believes that the Oral Authorization rule may increase options
for initiating efficient ACH transactions with the Federal Government.
Other Authorization Issues
The 2021 Operating Rules & Guidelines also include rules changes
grouped as Other Authorization Issues, which cover other modifications
and re-organizations of the general authorization rules for clarity,
flexibility, and consistency.
The rule will re-organize the general authorization rules to better
incorporate Standing Authorizations, Oral Authorizations, and other
changes. In addition, the amended rule will explicitly state that
authorization of any credit entry to a consumer account and any entry
to a non-consumer account can be by any method allowed by law or
regulation. Only consumer debit authorizations require a writing that
is signed or similarly authenticated. The amended rule also will
require all authorizations to meet the standards of ``readily
identifiable'' and ``clear and readily understandable terms,'' which
aim to reduce the incidence of erroneous transactions. Finally, the
rule will apply the ``minimum data element'' standards that currently
are only stated in the rules for Telephone-Initiated Entries to all
consumer debit authorizations.
The Fiscal Service proposes adoption of the amendments. The Fiscal
Service believes that these rule amendments will benefit the Federal
Government and those who participate in ACH transactions with it. By
adopting these amendments, the Federal Government will remain current
with standard industry practice and benefit from the increased
flexibility afforded by the authorization rules.

[[Page 46635]]

Alternative to Proof of Authorization
The 2021 Operating Rules & Guidelines also give an ACH Originator
and Originator the option of accepting a return of a transaction in
lieu of providing a copy of an authorization. Under the current Rules,
if an RDFI requests proof of authorization of a transaction, an
Originator is required to provide proof of authorization to its ODFI in
such time that the ODFI can respond to the RDFI's request within ten
banking days. Nacha reports that some ODFIs and Originators would
prefer to agree to accept the return of the debit rather than expend
the time and resources necessary to provide proof of authorization.
Nacha believes that the ``Alternative to Proof of Authorization''
rule will reduce an administrative burden on ODFIs and their
Originators for providing proof of authorization in every instance in
which it is requested by an RDFI. By allowing an alternative, the rule
is intended to help reduce the costs and time needed to resolve some
exceptions in which proof of authorization in requested. However, if
the RDFI still needs proof of authorization, the ODFI and its
Originator must provide the proof of authorization within ten days of
the RDFI's subsequent request.
The Fiscal Service proposes adoption of these amendments. The
Fiscal Service believes that these rule amendments may make certain ACH
transaction processes more efficient. For example, in certain instances
a Receiver of an ACH transaction may dispute the authorization. If the
Federal Government determines that it is inefficient to provide the
requested proof of authorization, the new rule will allow it to return
the ACH instead of expending resources to locate and transmit the
information to the RDFI and Receiver.
Written Statement of Unauthorized Debit via Electronic or Oral Methods
The 2021 Operating Rules & Guidelines changes the ``Written
Statement of Unauthorized Debit'' rule, which makes an RDFI responsible
for obtaining a consumer's Written Statement of Unauthorized Debit
(WSUD) prior to returning a debit as unauthorized. However, the current
Operating Rules & Guidelines do not explicitly address electronically
or orally provided WSUDs. Instead, they explicitly allow electronic
records and electronic signatures generally, which has resulted in
confusion about the electronic or oral acceptance of WSUDs. Nacha
reports that anecdotal evidence suggests that the significant majority
of WSUDs are still being obtained via paper using a wet signature.
The Written Statement of Unauthorized Debit via Electronic or Oral
Methods rule reduces an administrative burden on RDFIs and their
customers. It clarifies and makes explicit that an RDFI may obtain a
consumer's WSUD as an electronic record, and an RDFI may accept a
consumer's electronic signature, regardless of its form or the method
used to obtain it. These changes will emphasize that WSUDs may be
obtained and signed electronically, which could include the same
methods permissible for obtaining a consumer debit authorization.
The Fiscal Service proposes adoption of these amendments. The
Fiscal Service believes that the amendments to this rule may increase
the efficiency of ACH transactions involving the Federal Government by
explicitly allowing electronic records and signatures to be used for
written statements of unauthorized debits. This may allow ACH network
participants to expedite the processing of allegedly fraudulent
electronic transactions involving the Federal Government and other
parties.
Minor Rules Topics
These amendments change several areas of the Operating Rules &
Guidelines to address minor issues or correct errata. These changes
have little-to-no impact on ACH participants and no material impact on
the Federal Government's participation in the ACH network. NACHA's
minor rule amendments became effective on various dates, according to
the date of the Nacha errata correction or other message.
The Fiscal Service proposes to adopt these minor rule amendments.

III. Section-by-Section Analysis

In order to incorporate in Part 210 the Operating Rules &
Guidelines changes that we are accepting, we are replacing references
to the 2019 Rules & Guidelines with references to the 2021 Operating
Rules & Guidelines.

210.2(a)

We are proposing to amend the reference to NACHA--The Electronic
Payments Association (NACHA) to simply refer to Nacha.

Sec. 210.2(b)

We are proposing to amend the definition of ``applicable ACH
Rules'' at Sec. 210.2(d) by replacing the reference to the ``2019
NACHA Operating Rules and Guidelines'' with a reference to the ACH
Rules with an effective date on or before March 31, 2021, as published
in ``2021 Nacha Operating Rules & Guidelines'' and supplements thereto,
including the rule change adopted on March 31, 2021 that will increase
the Same Day ACH limit to $1 million, effective March 18, 2022. In
addition, we are proposing to expand the list of Operating Rules &
Guidelines that are not incorporated by reference to include the
Operating Rules & Guidelines governing the Participating DFI registry.
We are proposing to amend Sec. 210.3(b) by replacing the
references to the ``2019 NACHA Operating Rules & Guidelines'' with
references to ``Nacha's 2021 Operating Rules & Guidelines,'' as amended
through March 31, 2021.

Sec. 210.6

We are proposing to amend paragraph (g) by replacing the reference
to the ``2019 NACHA Operating Rules and Guidelines'' with a reference
to the ``2021 Nacha Operating Rules & Guidelines.''

IV. Incorporation by Reference

In this NPRM, Fiscal Service is proposing to incorporate by
reference the 2021 Operating Rules & Guidelines, including Supplement
#1-2021, as amended through March 31, 2021. The Office of Federal
Register (OFR) regulations require that agencies discuss in the
preamble of a proposed 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 proposed 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 2021 Operating Rules & Guidelines. Financial
institutions utilizing the ACH Network are bound by the Operating Rules
& Guidelines and have access to them in the course of their everyday
business. The Operating Rules & Guidelines are available as a bound
book or in online form from Nacha--The Electronic Payments Association,
2550 Wasser Terrace, Suite 400, Herndon, Virginia 20171, tel. 703-561-
1100, <a href="/cdn-cgi/l/email-protection#3950575f567957585a515817564b5e">[email&#160;protected]</a>.

V. Procedural Analysis

Request for Comment on Plain Language

Executive Order 12866 requires each agency in the Executive branch
to write regulations that are simple and easy to understand. We invite
comment on how to make the proposed rule clearer. For

[[Page 46636]]

example, you may wish to discuss: (1) Whether we have organized the
material to suit your needs; (2) whether the requirements of the rule
are clear; or (3) whether there is something else we could do to make
the rule easier to understand.

Regulatory Planning and Review

The proposed rule does not meet the criteria for a ``significant
regulatory action'' as defined in Executive Order 12866. Therefore, the
regulatory review procedures contained therein do not apply.

Regulatory Flexibility Act Analysis

It is hereby certified that the proposed rule will not have a
significant economic impact on a substantial number of small entities.
The proposed 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 proposed 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 proposed rule will not result in expenditures by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more in any one year. Accordingly,
we have not prepared a budgetary impact statement or specifically
addressed any regulatory alternatives.

List of Subjects in 31 CFR Part 210

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

Words of Issuance

For the reasons set out in the preamble, the Fiscal Service
proposes to amend 31 CFR part 210 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:
0
a. Revise paragraph (a) and the introductory text to paragraph (d);
0
b. Redesignate paragraphs (d)(2) through (7) as paragraphs (d)(3)
through (8); and
0
c. Add new paragraph (d)(2).
The revisions and addition read as follows:

Sec. 210.2 Definitions.

* * * * *
(a) ACH Rules means the Operating Rules and the Operating
Guidelines published by Nacha, a national association of regional
member clearing house associations, ACH Operators, and participating
financial institutions located in the United States.
* * * * *
(d) Applicable ACH Rules means the ACH Rules as published in ``2021
Nacha Operating Rules & Guidelines: A Complete Guide to Rules Governing
the ACH Network''and Supplement #1-2021 (both incorporated by
reference, see Sec. 210.3(b)), except:
* * * * *
(2) Section 1.14 (governing the Participating DFI Contact
registry);
* * * * *
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 into this part with the approval of the Director 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 Bureau of
Fiscal 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, and from the sources listed
elsewhere in this paragraph. 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 <a href="/cdn-cgi/l/email-protection#187e6a3671766b687d7b6c7177765876796a79367f776e">[email&#160;protected]</a>
or go to <a href="http://www.archives.gov/federal-register/cfr/ibr-locations.html">www.archives.gov/federal-register/cfr/ibr-locations.html</a>.
(1) Nacha, 2550 Wasser Terrace, Suite 400, Herndon, Virginia 20171,
tel. 703-561-1100, <a href="/cdn-cgi/l/email-protection#325b5c545d725c53515a531c5d4055">[email&#160;protected]</a>.
(i) 2021 Nacha Operating Rules & Guidelines, with an effective date
on or before March 31, 2021.
(ii) Supplement #1-2021 to the 2021 Nacha Operating Rules &
Guidelines.
(2) [Reserved]
* * * * *

David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2021-17268 Filed 8-18-21; 8:45 am]
BILLING CODE P

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