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Proposed Rule2024-17413

Federal Government Participation in the Automated Clearing House

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Published

August 9, 2024

Issuing agencies

Treasury DepartmentBureau of the Fiscal 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 incorporates, with some exceptions, updates to the Nacha Operating Rules and the Nacha Operating Guidelines (Operating Rules & Guidelines), which govern the use of the ACH Network by Federal agencies. This proposed rule addresses changes that Nacha has made since the publication of the 2021 Operating Rules & Guidelines, including Supplement #1-2021. These changes include amendments in the 2022, 2023, and 2024 Operating Rules & Guidelines, including supplements thereto, issued before the date of this notice.

Full Text

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<title>Federal Register, Volume 89 Issue 154 (Friday, August 9, 2024)</title>
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[Federal Register Volume 89, Number 154 (Friday, August 9, 2024)]
[Proposed Rules]
[Pages 65296-65301]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-17413]

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DEPARTMENT OF THE TREASURY

Bureau of the Fiscal Service

31 CFR Part 210

[Docket No. FISCAL-2024-0001]
RIN 1530-AA31

Federal Government Participation in the Automated Clearing House

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

ACTION: Notice of proposed rulemaking; 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 incorporates, with some exceptions, updates to the Nacha
Operating Rules and the Nacha Operating Guidelines (Operating Rules &
Guidelines), which govern the use of the ACH Network by Federal
agencies. This proposed rule addresses changes that Nacha has made
since the publication of the 2021 Operating Rules & Guidelines,
including Supplement #1-2021. These changes include amendments in the
2022, 2023, and 2024 Operating Rules & Guidelines, including
supplements thereto, issued before the date of this notice.

DATES: Comments on the proposed rule must be received by October 8,
2024.

ADDRESSES: Comments on this rule, identified by docket number FISCAL-
2024-0001, should be submitted through the Federal eRulemaking Portal
at <a href="http://www.regulations.gov">www.regulations.gov</a>. Follow the instructions on the website for
submitting comments.
Instructions: All submissions received must include the agency name
(Bureau of the Fiscal Service) and docket number FISCAL-2024-0001 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 include any information in your comment or
supporting materials that you consider confidential or inappropriate
for public disclosure.
In accordance with the U.S. government's eRulemaking Initiative,
the 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 proposed rules.

FOR FURTHER INFORMATION CONTACT: Ian Macoy, Director of Settlement
Services, at (202) 874-6835 or <a href="/cdn-cgi/l/email-protection#dfb6beb1f1b2bebcb0a69fb9b6acbcbeb3f1abadbabeacaaada6f1b8b0a9">[email&#160;protected]</a>; or Frank
J. Supik, Supervisory Counsel, at <a href="/cdn-cgi/l/email-protection#1c7a6e7d7277326f696c75775c7a756f7f7d7032686e797d6f696e65327b736a">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

1. 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 interbank 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
types of participants, including the:
<bullet> Originator: An organization 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

[[Page 65297]]

receives entries from the ACH Operator and posts them to the accounts
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. 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 promote 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 2021 Operating Rules &
Guidelines, including Supplement #1-2021, subject to certain
exceptions. Nacha has adopted several changes since the publication of
the 2021 Operating Rules & Guidelines, including Supplement #1-2021, as
reflected in the 2024 Operating Rules & Guidelines and supplements
thereto.\1\ We are proposing to incorporate all of these changes in
part 210.
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\1\ The 2024 Operating Rules & Guidelines also incorporates
changes that Nacha previously adopted and incorporated into the 2022
and 2023 Operating Rules & Guidelines. This proposal also highlights
applicable changes to the Operating Rules & Guidelines that were
incorporated into prior versions of the Nacha Operating Rules &
Guidelines.
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We are requesting public comment on all the proposed amendments to
part 210, including with respect to changes that would be incorporated
by reference.

2. Summary of Proposed Rule Changes

Since the publication of the 2021 Operating Rules & Guidelines,
including Supplement #1-2021, Nacha has published three versions of the
Operating Rules & Guidelines: the 2022 Operating Rules & Guidelines,
the 2023 Operating Rules & Guidelines, and the 2024 Operating Rules &
Guidelines, including Supplement #1-2024. Below, we outline the major
changes that were included in these updates.

(a) 2022 Operating Rules & Guidelines Changes

The 2022 Operating Rules & Guidelines implemented several changes
to the Operating Rules & Guidelines, some of which Nacha had previously
adopted with a delayed implementation date and were addressed in a
prior Fiscal Service rulemaking.\2\ The 2022 Operating Rules &
Guidelines also clarified the rules regarding third-party senders in
the ACH Network.
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\2\ See 87 FR 42 (Jan. 3, 2022); 31 CFR part 210. Updates to the
Operating Rules & Guidelines that were reflected in previous Fiscal
Service rulemakings are not discussed in this proposal, even if the
implementation date of the updates occurred after adoption of
current part 210.
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Nacha first defined ``nested'' third-party senders and addressed
the roles and responsibilities applicable to ODFIs working with them.
Nacha defined a Nested Third-Party Sender (Nested TPS) as a Third-Party
Sender (TPS) that has an agreement with another TPS to act on behalf of
an Originator and does not have a direct agreement with the ODFI. Nacha
requires ODFIs' origination agreements with TPSs to address Nested
TPSs, and to update their TPS obligations and warranties to cover
Nested TPSs.
Moreover, ODFIs must identify all TPSs that have Nested TPS
relationships in Nacha's Risk Management Portal and must provide Nacha
with the Nested TPS relationships for any of their TPSs upon request.
The 2022 Operating Rules & Guidelines provides timeframes for
compliance and establishes requirements for updating information that
has changed.
Additionally, the Third-Party Senders and Risk Assessments rule
requires that a TPS, whether or not it is a Nested TPS, conduct a Risk
Assessment. Under that rule, a TPS must implement, or have implemented,
a risk management program based on its risk assessment. The rule states
that the obligation for the TPS to perform a risk assessment, as with
the required rules compliance audit, cannot be passed on to another
party. Each TPS must conduct or have conducted its own risk assessment.
The Fiscal Service proposes to adopt these rule changes, in order
to maintain consistency with other ACH Network participants and
facilitate uniform processing of transactions.

(b) 2023 Operating Rules & Guidelines Changes

The 2023 Operating Rules & Guidelines implement several additional
changes beyond those in the 2022 Operating Rules & Guidelines, some of
which were previously adopted by Fiscal Service.\3\ Additional changes
include, but are not limited to, implementing parts of the TPS rule
discussed above and adopting ``Phase 1'' of Nacha's Micro-Entry Rule.
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\3\ See 87 FR 42 (Jan. 3, 2022); 31 CFR part 210.
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Phase 1 of the Micro-Entry Rule defined ``Micro-Entries'' as a type
of payment in the Operating Rules & Guidelines. ``Micro-Entries'' are
ACH credits of less than $1, and any offsetting ACH debits, used for
the purpose of verifying a Receiver's account. Originators of Micro-
Entries must use a standard ``Company Entry Description'' and populate
the ``Company Entry Name'' field with the same or similar name to be
used in future entries. The rule also requires Originators using debit
entry offsets to send the debit and corresponding credit Micro-Entries
simultaneously for settlement at the same time, establishes certain
limits on the amount of the Micro-Entries, and prohibits Micro-Entries
that result in a net debit to the Receiver.
The Fiscal Service proposes to adopt these rule changes. Adoption
of these changes will maintain consistency with other ACH Network
participants and facilitate fraud-prevention strategies that may reduce
the incidence of improper payments.

The 2024 Operating Rules & Guidelines implement several additional
changes, including ``Phase 2'' of Nacha's Micro-Entry Rule. Phase 2 of
the Micro-Entry Rule built upon Phase 1 (discussed above) by requiring
Originators of Micro-Entries to use commercially reasonable fraud-
detection practices, including the monitoring of forward and return
Micro-Entry volumes.
The Fiscal Service proposes to adopt these rule changes. Adoption
of these changes will maintain consistency with other ACH Network
participants and facilitate fraud-prevention strategies that

[[Page 65298]]

may reduce the incidence of improper payments.

(d) 2024 Operating Rules & Guidelines, Supplement #1-2024 Changes

On April 12, 2024, Nacha published Supplement #1-2024 to the 2024
Nacha Operating Rules (Supplement #1-2024). Supplement #1-2024 included
several updates to the Nacha Operating Rules ACH risk management
requirements and made several other updates.
(i) Risk Management Requirements
The risk management topics covered in Supplement #1-2024 include
clarifying and expanding the use of certain codes, formalizing a
current practice regarding certain transactions that are suspected of
origination under false pretenses, updating requirements for a
``Written Statement of Unauthorized Debit,'' specifying a timeframe for
return of authorized debits, updating certain fraud-monitoring
requirements, imposing ACH credit monitoring requirements on RDFIs,
creating two new Company Entry Descriptions, and several other minor
updates. Each is discussed below in turn.
(1) Use of Return Reason Code R17
The Operating Rules & Guidelines provide several codes to provide
additional detail on an ACH transaction. Previously, the Operating
Rules & Guidelines did not have a defined code to identify an ACH
transaction, in its return, as fraudulent. Supplement #1-2024 will
explicitly allow an RDFI to use Return Reason Code R17 to return an
entry that it believes is fraudulent. Use of this code is optional, and
the Fiscal Service has followed this procedure for several years. Nacha
expects, and the Fiscal Service agrees, that this rule is expected to
improve the recovery of funds originated due to fraud.
The Fiscal Service proposes to adopt these rule changes. Adoption
of these changes will maintain consistency with other ACH Network
participants and facilitate fraud-prevention strategies that may reduce
the incidence of improper payments.
(2) Expanded Use of ODFI Request for Return--R06
Previously, under the Operating Rules & Guidelines, an ODFI could
request that an RDFI return a defined ``Erroneous Entry'' or a credit
entry that was originated without the authorization of the Originator
using Return Reason Code R06. The RDFI may, but has not been obligated
to, comply with the ODFI's request. ODFIs that wish to request the
return of a potentially fraudulent entry have not had a clear means to
do so, because the rules limited the use of R06 to specific situations.
Supplement #1-2024 expands the permissible uses of the Request for
Return to allow an ODFI to request a return from the RDFI for any
reason. This updated rule will not impact the Operating Rules &
Guidelines' indemnification provisions. However, it requires the RDFI
to respond to the ODFI, regardless of whether the RDFI complies with
the ODFI's request to return the entry. The RDFI must advise the ODFI
of its decision or the status of the request within 10 banking days of
receipt of the ODFI's request.
Nacha indicates, and the Fiscal Service agrees, that this update is
intended to improve the recovery of funds when fraud has occurred. The
update also more accurately reflects how some ACH participants
currently conduct their operations.
The Fiscal Service proposes to adopt these rule changes. Adoption
of these changes will maintain consistency with other ACH Network
participants and facilitate fraud-prevention strategies that may reduce
the incidence of improper payments.
(3) Additional Funds Availability Exceptions
The Operating Rules & Guidelines have provided RDFIs with an
exemption from funds availability requirements if the RDFI reasonably
suspects the credit entry was unauthorized. Supplement #1-2024 provides
RDFIs with an additional exemption from the funds availability
requirements to include credit ACH entries that the RDFI suspects are
originated under false pretenses. While RDFIs remain subject to
Regulation CC's funds availability requirements, an RDFI can delay
funds availability if its fraud-detection processes and procedures
identify a flag.
Nacha asserts that this change will provide participants with an
additional tool to manage potentially questionable or suspicious
transactions that fall under the ``authorized fraud'' category, and
provide RDFIs and ODFIs with additional time to communicate before
funds availability is required.
The Fiscal Service proposes to adopt this rule change. Adoption of
this change will maintain consistency with other ACH Network
participants and may improve the potential for recovery of funds when
fraud has occurred.
(4) Timing of Written Statement of Unauthorized Debit
Under the Operating Rules & Guidelines, when a consumer Receiver
notifies an RDFI of an unauthorized debit, the RDFI must obtain a
``Written Statement of Unauthorized Debit'' (WSUD). Before Supplement
#1-2024, the WSUD was required to be dated on or after the Settlement
Date (as defined in the Operating Rules & Guidelines) of the
unauthorized debit entry. However, through digital notifications and
alerts, a consumer may be able to report an unauthorized debit prior to
its posting to the account.
Supplement #1-2024 updates the WSUD rules to allow a consumer
Receiver to sign and date a WSUD on or after the date on which the
entry is presented to the Receiver, even if the debit has not yet
posted to the account. The updated rule does not otherwise change the
requirement for an RDFI to obtain a consumer's WSUD.
The Fiscal Service proposes to adopt this rule change. Adoption of
this change will maintain consistency with other ACH Network
participants and may improve the process and experience when debits are
claimed to be unauthorized. Moreover, increasing the speed of returns
can help participants manage risk and receive returns faster.
(6) Prompt RDFI Return of Unauthorized Debits
The Operating Rules & Guidelines previously stated that an RDFI
must transmit an extended return entry for which it recredits a
Receiver's account in such time that the entry can be made available to
the ODFI no later than the opening of business on the banking day
following the 60th calendar day following the settlement date of the
original entry. However, the rules were silent as to the timeframe for
the RDFI to return the entry after receiving a signed and dated WSUD.
Supplement #1-2024 updates the Operating Rules & Guidelines to
require RDFIs to transmit these returns in such time that the entry can
be made available to the ODFI no later than the opening of business on
the sixth banking day following the completion of RDFI's review of the
consumer's signed WSUD, and in such time that it is made available to
the ODFI no later than the opening of business on the banking day
following the 60th calendar day following the settlement date of the
original entry.
The Fiscal Service proposes to adopt this rule change. Adoption of
this change will maintain consistency with

[[Page 65299]]

other ACH Network participants. Moreover, increasing the speed of
returns can help participants manage risk and receive returns faster.
(7) Fraud Monitoring by Originators, Third-Party Service Providers/
Third-Party Senders and ODFIs
The Operating Rules & Guidelines have required Originators to use a
commercially reasonable fraudulent-transaction detection system to
screen WEB debits and when using Micro-Entries. However, these
requirements did not encompass any other transaction types, and have
not applied to other types of debits or to any credits other than
Micro-Entries.
Supplement #1-2024 will require each non-consumer Originator, ODFI,
Third-Party Service Provider, and Third-Party Sender to establish and
implement risk-based processes and procedures reasonably intended to
identify ACH entries initiated due to fraud. Each of these parties will
need to review at least annually their processes and procedures and
make any appropriate updates to address evolving risks.
The Fiscal Service proposes to adopt this rule change. Adoption of
this change will maintain consistency with other ACH Network
participants and may further reduce the incidence of fraud or other
improper payments or collections.
(8) ACH Credit Monitoring by RDFIs
The Operating Rules & Guidelines have required ODFIs, but not
RDFIs, to perform debit transaction monitoring. These requirements are
distinct from existing requirements to monitor suspicious
transactions.\4\
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\4\ See, e.g., 31 CFR Subtitle B, Chapter X.
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Supplement #1-2024 will require RDFIs to establish and implement
risk-based processes and procedures reasonably intended to identify
credit ACH entries initiated due to fraud. As with the other entities,
RDFIs will need to review at least annually their processes and
procedures and make any appropriate updates to address evolving risks.
The Fiscal Service proposes to adopt this rule change.\5\ Adoption
of this change will maintain consistency with other ACH Network
participants and may further reduce the incidence of fraud or other
improper payments or collections.
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\5\ This change to the Nacha Operating Rules will become
effective in two phases, on March 20, 2026, and June 19, 2026. The
Fiscal Service proposes to adopt these changes consistent with their
effective dates in the Nacha Operating Rules.
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(9) Standard Company Entry Descriptions--PAYROLL and PURCHASE
The Operating Rules & Guidelines contain standards to identify
certain types of Company Entry Descriptions. This allows network
participants to readily identify the type of ACH transaction.
Supplement #1-2024 establishes two new Company Entry Descriptions,
PAYROLL and PURCHASE. The PAYROLL description must be used for PPD ACH
credits that are for the payment of wages, salaries, and other similar
types of compensation. The PURCHASE description will be required for e-
commerce purchases, which for the purpose of the Operating Rules &
Guidelines will be defined as a debit entry authorized by a consumer
Receiver for the online purchase of goods.
The new descriptions will enable identification of payroll and e-
commerce transactions, which may assist in the identification and
reduction of certain types of fraud, such as payroll redirections.
The Fiscal Service proposes to adopt this rule change. Adoption of
this change will maintain consistency with other ACH Network
participants and can help parties manage risk and improve ACH Network
quality.
ii. Minor Updates to the Operating Rules & Guidelines
In addition, Nacha updated and clarified minor topics.\6\ These
topics include:
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\6\ These changes to the Nacha Operating Rules were effective as
of June 21, 2024. Because this date has already passed, the Fiscal
Service proposes to implement these changes on the date when the
final rule under this docket becomes effective.
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<bullet> Revising the definition of a ``WEB'' entry and the general
rules applying to such entries to clarify that this code must be used
for all consumer-to-consumer credits, regardless of how the consumer
communicates the payment instruction to the ODFI or the Person-to-
Person service provider.
<bullet> Revising the definition of ``Originator'' to add a
reference to the Originator's authority to credit or debit the
Receiver's account. The change includes a notation to the definition
that the rules do not always require a Receiver's authorization, such
as with Reversing, Reclamation and Person-to-Person Entries.
<bullet> Revising the rules regarding Notifications of Change
(NOCs) entries to provide Originators discretion on whether to make NOC
changes for any single entry, regardless of SEC Code. Previously, the
rules applied to single entries bearing certain SEC Codes (ARC, BOC,
POP, RCK, TEL, WEB, and XCK), but were silent on single entries bearing
other SEC Codes. This change aligned the Operating Rules & Guidelines
with common practice, where Originators have treated NOCs for all one-
time entries similarly.
<bullet> Revising the requirements regarding the protection of
account numbers to clarify that once a covered party meets the volume
threshold for protecting account numbers for the first time, this
requirement remains in effect even if the covered party's future volume
falls below the threshold.
<bullet> Aligning prenotification rules with current industry
practice. The Operating Rules & Guidelines previously allowed
Originators to transmit prenotification entries for account validation
before initiation of the first credit or debit entry to the Receiver's
account. The amendment removed language that limited prenote use to
only prior to the first credit or debit entry.
<bullet> Replacing references to ``subsequent entry'' in the
Operating Rules & Guidelines with synonymous terms (e.g., future,
additional, another) to avoid any confusion with the new definition
``Subsequent Entry'' and remedy ambiguous references to the phrase
``subsequent entry'' that result from the other changes.
The Fiscal Service proposes to adopt these rule changes. These
changes do not appear to make significant substantive changes.
Therefore, adopting these changes will maintain consistency with other
ACH Network participants, which can lead to more efficient operations.

(e) Entry of Federal Government Transactions Into the ACH Network

In addition to the above updates to the Operating Rules &
Guidelines, the Fiscal Service proposes to eliminate a current
exemption from the Operating Rules & Guidelines.
Currently, the definition of ``Applicable ACH Rules'' in part 210
exempts the federal government from ``[t]he 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.'' \7\
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\7\ 31 CFR 210.2(d)(4).
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This exemption has been used to allow the federal government to
transmit ACH transactions outside of the Operating Rules & Guidelines'
window. This has facilitated federal government disbursement
operations.

[[Page 65300]]

However, Treasury believes that this exemption no longer provides
material benefits to the government or the public. Removing this
restriction would place the federal government on equal footing with
industry, with regard to the timing of initiating ACH entries. It may
also facilitate Treasury's cash management operations. Accordingly, the
Fiscal Service proposes to eliminate current section 210.2(d)(4).

3. Section-by-Section Analysis

Sec. 210.2(a)

In order to incorporate in part 210 the Operating Rules &
Guidelines changes as described above, we propose to replace references
to the 2021 Operating Rules & Guidelines, including Supplement #1-2021,
with references to the 2024 Operating Rules & Guidelines, as updated
through Supplement #1-2024. In particular, we are proposing to amend
the definition of ``ACH Rules'' at Sec. 210.2(a) by replacing the
reference to the ``2021 Operating Rules and Guidelines, including
Supplement #1-2021'' with a reference to the ACH Rules as published in
the 2024 Nacha Operating Rules & Guidelines, as updated through
Supplement #1-2024.

Sec. 210.2(d)

We are proposing to remove paragraphs (d)(4) and (d)(8) from
current section 210.2(d). The reasons for removing paragraph (d)(4) are
described in section 2(e) above. The Fiscal Service proposes to remove
paragraph (d)(8) because that paragraph ceased to be effective, by its
terms, on March 19, 2022.

Sec. Sec. 210.0 and 210.3(b)

To conform with current Office of the Federal Register structure
and format requirements for incorporation by reference (IBR), we are
proposing to remove the centralized IBR content currently in Sec.
210.3(b) (reserving paragraph (b)) and add it as a new stand-alone
section, Sec. 210.0. We are also proposing to amend the IBR content in
new Sec. 210.0 by replacing the references to the 2021 Operating Rules
& Guidelines and Supplement #1-2021 with references to Nacha's 2024
Operating Rules & Guidelines, including Supplement #1-2024.

4. Incorporation by Reference

In this proposal, the Fiscal Service is proposing to incorporate by
reference the 2024 Operating Rules & Guidelines, including Supplement
#1-2024, as amended through April 12, 2024. The Office of the Federal
Register 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 those
regulations, the discussion in sections 1 and 2 of this SUPPLEMENTARY
INFORMATION describes the Nacha Operating Rules and summarizes the
changes to them since the 2021 Operating Rules & Guidelines, including
Supplement #1-2021, were incorporated by reference into part 210.
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 (including
the supplements) are available as a bound book or in online form from
Nacha--The Electronic Payments Association at: 2550 Wasser Terrace,
Suite 400, Herndon, Virginia 20171; phone: 703-561-1100; email:
<a href="/cdn-cgi/l/email-protection#7b12151d143b151a18131a5514091c">[email&#160;protected]</a>.

5. 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 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, as amended.
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 use 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 an 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.

For the reasons set out above, 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. Add Sec. 210.0 to read as follows:

Sec. 210.0 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 the Fiscal Service must
publish a document in the Federal Register and the material must be
available to the public. All approved incorporation by reference (IBR)
material is available for inspection at the Bureau of the Fiscal
Service and at the National Archives and Records Administration (NARA).
Contact the Bureau of the Fiscal Service at 401 14th Street SW, Room
400A, Washington, DC 20227; phone: 202-874-6680; website:
<a href="http://www.fiscal.treasury.gov">www.fiscal.treasury.gov</a>. For

[[Page 65301]]

information on the availability of this material at NARA, visit
<a href="http://www.archives.gov/federal-register/cfr/ibr-locations">www.archives.gov/federal-register/cfr/ibr-locations</a> or email
<a href="/cdn-cgi/l/email-protection#d7b1a5f9beb9a4a7b2b4a3beb8b997b9b6a5b6f9b0b8a1">[email&#160;protected]</a>. The material may be obtained from Nacha, 2550
Wasser Terrace, Suite 400, Herndon, Virginia 20171; phone: 703-561-
1100; email: <a href="/cdn-cgi/l/email-protection#87eee9e1e8c7e9e6e4efe6a9e8f5e0">[email&#160;protected]</a>.
(a) 2024 Nacha Operating Rules & Guidelines: The Guide to the Rules
governing the ACH Network, copyright 2024; into Sec. 210.2.
(b) Supplement #1-2024, Notice of Amendment to the 2024 Nacha
Operating Rules, dated April 12, 2024; into Sec. 210.2.
0
3. In Sec. 210.2:
0
a. Revise paragraph (a);
0
b. Remove paragraphs (d)(4) and (d)(8); and
0
c. Redesignate paragraphs (d)(5) through (7) as paragraphs (d)(4)
through (6).
The revisions read as follows:

Sec. 210.2 Definitions.

* * * * *
(a) ACH Rules means the 2024 Nacha Operating Rules & Guidelines:
The Guide to the Rules Governing the ACH Network, as updated through
Supplement #1-2024 (both incorporated by reference, see Sec. 210.0)
and published by Nacha, a national association of regional member
clearing house associations, ACH Operators, and participating financial
institutions located in the United States.
* * * * *

Sec. 210.3 [Amended]

0
4. In Sec. 210.3, remove and reserve paragraph (b).

David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2024-17413 Filed 8-8-24; 8:45 am]
BILLING CODE 4810-AS-P

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