[Federal Register Volume 69, Number 127 (Friday, July 2, 2004)]
[Rules and Regulations]
[Pages 40315-40317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15071]



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DEPARTMENT OF JUSTICE

Bureau of Prisons

28 CFR Parts 506 and 540

[BOP Docket No. 1091-F]
RIN 1120-AA86


Inmate Commissary Account Deposit Procedures

AGENCY: Bureau of Prisons, Justice.

ACTION: Final Rule.

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SUMMARY: In this document, the Bureau of Prisons (Bureau) amends its 
regulations on how an inmate may receive funds from family, friends, 
and other sources. Under previous regulation, funds intended for any 
inmate's use were included in correspondence sent to the inmate or left 
with staff as part of visiting. Staff at the institution arranged for 
the deposit of these funds into the inmate's account. Under the new 
regulations, funds from family, friends, or other sources will no 
longer be sent to the inmate but will instead be sent directly to a 
centralized inmate commissary account in the form of a money order for 
receipt and posting. Under the new rule, we will not accept funds sent 
by family or friends to the inmate's location. Instead, we will return 
them to the sender, provided there is an adequate return address. We 
intend this amendment to provide for the more efficient processing of 
inmate funds.

DATES: This rule is effective August 2, 2004.

ADDRESSES: Rules Unit, Office of General Counsel, Bureau of Prisons, 
320 First Street, NW., Washington, DC 20534.

FOR FURTHER INFORMATION CONTACT: Sarah Qureshi, Office of General 
Counsel, Bureau of Prisons, phone (202) 307-2105.

SUPPLEMENTARY INFORMATION: The Bureau adds new regulations (28 CFR Part 
506) pertaining to inmate deposits and makes conforming amendments to 
the regulation on inmate correspondence (28 CFR 540.23). We published 
the proposed rule on this subject on April 23, 1999 (64 FR 20125). We 
published the previous provisions in Sec.  540.23 in the Federal 
Register on October 1, 1985 (50 FR 40109).

What Does the New Rule Do?

    This new rule establishes a centralized inmate funds collection 
process commonly referred to as ``LockBox''. The funds will be 
processed at the central location and then electronically transferred 
to the inmate's Commissary account at the location where the inmate is 
housed via an existing Trust Fund Wide Area Network. There is no 
additional cost for this transfer. The LockBox services are provided to 
the Bureau through an Interagency Agreement with the U.S. Treasury. 
Independent banks are not affected as all Commissary funds are required 
to be maintained in the U.S. Treasury. The inmate Trust Fund will pay 
for the LockBox services, depending on the volume of transactions, but 
no taxpayer money is involved.
    Previous provisions on general correspondence allow an inmate, upon 
completing the appropriate form, to receive funds through the mail from 
family or friends or, on approval of the Warden, from other persons for 
crediting to the inmate's trust fund account. Previous provisions on 
visiting provide that the Warden may allow a visitor to leave money 
with a designated staff member for deposit in the inmate's commissary 
account. Institution staff were responsible for processing these funds.
    Under the new rule, all inmate funds from family and friends must 
be sent directly to a centralized inmate commissary account. The 
deposit must be in the form of a money order and the envelope must not 
contain any enclosures intended for delivery to the inmate as any 
enclosure is subject to disposal.
    We must receive deposits in the form of a money order. We will not 
accept personal checks, but will return them provided the check has 
adequate return address information. However, if we receive funds from 
other sources, such as tax refunds, dividends from stocks, or state 
benefits, we will forward them for deposit into the centralized inmate 
commissary account. Tax refunds, dividends from stocks, and state 
benefits are recognized as Treasury checks, and Bureau experience has 
shown that they have a much lower risk of cancellation (e.g., 
``bouncing'') than personal checks. Also, unlike personal checks, 
Treasury checks do not have a 15 day hold, so the inmates receive their 
funds immediately upon processing.
    We previously managed our inmate accounting functions in a 
completely de-centralized fashion. Each institution operated separately 
and distinctly from one another, although each performed virtually 
identical functions, such as posting mail room collections to inmate 
accounts, making daily trips to the bank to deposit collections, 
establishing inmate accounts each time an inmate arrives at their 
current location, and transferring funds between institutions. We 
believe that having a centralized inmate commissary account will 
benefit inmates by allowing them immediate access to their funds.
    Also, the centralized inmate commissary account will eliminate 
redundant work efforts, allow institutions complete access to detailed 
inmate account history, remove personal liability from institution 
staff related to handling of inmate funds, and enhance Bureau security 
by allowing centralized reporting and comparisons of sources of 
incoming funds and destination of outgoing funds across all 
institutions. The tremendous growth of the number of Bureau facilities 
coupled with new computer networking technology have made the current 
method of managing inmate funds outdated, inefficient, and costly.

Comments

    One commenter asks if it is possible to have some type of savings 
account and transfer money from an inmate account to that bank savings 
account or a mutual fund. This commenter also asks how much money 
inmates are allowed to have in their inmate account.
    Under current Bureau policy, (Program Statement 2000.02, Accounting 
Management Manual) we encourage inmates to participate in a continuous 
savings program. The savings may be in the form of a passbook savings 
account, certificate of deposit, any money market accounts, or U.S. 
Savings Bonds. Inmates are not limited in the amount that may be 
maintained in their inmate account.
    Another commenter makes the following recommendations:
    1. Clarify in the rule language what type of money order is 
permissible (postal Money Order, American Express Money Order, etc).
    Our Response: Because we need the flexibility to quickly add 
different types of money orders to a list of permissible money orders, 
we choose not to set forth the list in rule language. However, the 
types of money orders processed will include U.S. postal money orders; 
domestic money orders (e.g., American Express Money Order); postal 
money orders issued by Anguilla, Antigua and Barbuda, Bahamas, 
Barbados, Belize, British Virgin Islands, Cornado, Dominica, Grenada, 
Montserrat, St. Christopher, Nevis, St. Lucia, and St. Vincent and the 
Grenadines; and Canadian postal money orders--if they are addressed to 
a payee within the United States and the amount is expressed in United 
States currency.
    2. The centralized location for the inmate accounts should be 
Bureau headquarters.

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    Our Response: We do not have the capability at Bureau headquarters 
to properly process inmate funds. We will select an organization for 
collection and distribution of inmate funds that is capable of 
immediately processing incoming money orders and electronically 
dispersing the funds to the appropriate inmate deposit fund accounts.
    3. Money orders should include inmate name and number.
    Our Response: Section 506.2(a)(2) of the rules change specifies 
that the money order must be made out to the inmate's full name and 
complete register number.
    4. Any funds received by institutions from other sources should be 
sent by registered mail on a daily basis from each institution and be 
accompanied by a list with the inmate name, number, and amount of the 
check.
    Our Response: Bureau policy will address the process by which funds 
received at an institution will be forwarded or returned. Because 
information on this issue constitutes Bureau guidance to its staff at 
the institutions, this is more appropriately addressed in Bureau 
policy.
    Another commenter had the following concerns:
    1. The changes to the rule would cause confusion among families, 
friends and businesses regarding the proper procedures for sending 
money. The central receiving location may also lose money/money orders 
sent in for inmates.
    Our Response: Actually, the rule would allow inmates quicker access 
to money orders. Money orders sent to the centralized collection 
location under the proper procedures will be electronically deposited 
into the inmate's account, allowing the inmate to have quicker access 
to those funds than current operational procedures permit.
    2. The rule does not set forth a process for accepting checks from 
businesses that may be refunding money for items the inmate ordered but 
were not available.
    Our Response: We will address refunds from businesses in 
corresponding Bureau policy.
    3. The rule does not address how or when we will notify the inmate 
that we have received or rejected funds designated for their account.
    Our Response: Because such details regarding notification 
constitute Bureau guidance to its staff at the institutions, this is 
more appropriately addressed in Bureau policy.
    Another commenter stated that, since inmates receive money from 
families as gifts and often such mail contains cards, letters, and 
magazines, etc., the rule would have a chilling effect on familial 
contact and a reduction in familial monies to assist the inmates. This 
commenter is concerned that this reduction would decrease the ability 
of inmates to pay their COIF, fines and restitution which could impact 
state, local and tribal governments.
    Currently, staff removes money from incoming mail and credits the 
inmate's account as appropriate. The new process described in the rules 
is different only in that money orders will go to a location other than 
where the inmate is physically incarcerated. It will still be credited 
to the inmate's account as appropriate, and inmates will actually be 
able to access newly-arrived funds more quickly because of the 
electronic depositing system.
    Also, the Bureau's responsibility to its inmates requires that 
inmates have quick and easy access to deposited funds. We do not 
believe that this rule will have a ``chilling effect'' on familial 
communications because it will not hamper families' abilities to send 
cards to inmates or continue any other previously existing form of 
personal communication. Families may communicate with inmates using the 
same procedures as existed before this rule. This rule merely addresses 
how money may be sent so that inmates may receive it more quickly.
    Another commenter is concerned that the Bureau will only allow 
funds from family and friends in the form of a money order. The 
commenter states that preventing personal checks would create a 
hardship for relatives or friends who may be elderly or infirm or who 
have busy schedules. The time and hassle of waiting in line at the post 
office (or bank) is too much for some people because of time 
constraints or physical limitations.
    The primary focus of this rule is on the efficient management of 
inmate funds. Relatives and friends may easily, without ``time and 
hassle,'' get money orders from the U.S. Postal Service, banks, and 
convenience stores or supermarkets. Money orders will be more 
convenient for the inmate, since electronic depositing will allow funds 
to be available immediately. By contrast, domestic personal checks, 
once received, have a 15-day hold before an inmate may access those 
funds and non-domestic and foreign negotiable instruments have a 30-60-
day hold before an inmate may access those funds.
    There are several other reasons for our decision not to accept 
personal checks. Accepting personal domestic and foreign checks 
increases the risk of accepting insufficient funds, processing canceled 
checks and forged checks, etc. Approximately three percent of all 
negotiable instruments we received for deposit into inmate accounts are 
domestic checks. Of those, approximately 600 per year are determined to 
have insufficient funds. Up to 60 hours of staff time/resources is 
expended for each check we accept that must later be returned for 
insufficient funds.
    Under the previous system, unless otherwise notified of 
insufficient funds by the U.S. Treasury, funds are automatically posted 
to the inmate's Commissary account after the holding period has 
elapsed. The inmate may then spend the funds. However, if a check 
posted to an inmate account is later returned by the U.S. Treasury on a 
debit voucher for insufficient funds (found to be a ``bad check''), the 
amount of the returned check is immediately removed from the inmate 
account. This can occur even after the funds have been in the inmate's 
account for 30 days or more.
    If the inmate has insufficient funds when we seek to remove money 
placed there as a result of a bad check, all of the inmate's available 
funds are withdrawn and the inmate's account may reflect a negative 
balance for the uncollected amount. Furthermore, any future funds the 
inmate receives will be applied toward the negative balance resulting 
from the bad check until full reimbursement has been collected.
    A total of 97% of debit vouchers received are received after the 
funds have been posted. It was found that an inmate's accounts may have 
a negative balance from two to 24 months. When the inmate carries a 
negative balance, staff must ensure that all funds posted to his 
account are removed as partial payment for the bad check, and staff 
must generate several accounting entries to the Standard General Ledger 
(SGL). This process may prove to be extremely time consuming. Although 
the total time period to process a debit voucher should be no greater 
than .75 hours, staff resources to collect and process partial payments 
on one lengthy case may easily exceed 48 hours.
    If the inmate is released from custody with a negative balance, or 
if a debit voucher is received from the U.S. Treasury after the 
inmate's release, we must initiate debt collection procedures under the 
Debt Collection Act. Collection procedures include immediate contact 
with the former inmate, notifying them of the debt owed, with 
subsequent follow-up letters requesting reimbursement of the cancelled 
negotiable instrument. This

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initial process may take from 30 to 90 days to complete, once more 
consuming staff resources. As the time for the letters written, routed, 
and phone calls made, are accounted for, this process may use eight 
hours of resources.
    If all attempts to collect the debt are unsuccessful, staff must 
contact the appropriate Regional Office, which must make a 
determination to immediately refer the case to the Central Office Debt 
Management Officer, or initiate correspondence to the debtor from the 
Deputy Regional Director. If debt collection is still unsuccessful, 
then the case will be referred to the Debt Management Officer located 
in the Central Office. Approximately four hours of resources are used 
in this process.
    The Central Office Debt Management Officer will then recommend 
final disposition of the debt, either referring the debt to the IRS 
Offset Program or recommending a write-off of the debt.
    Collection of debts from former inmates can be extremely time 
consuming and unsuccessful. Under the new rule, by not accepting 
domestic checks, we will greatly reduce the loss of money, staff time 
and resources from unsuccessful collection attempts.

Executive Order 12866

    The Director certifies that this rule is a ``significant regulatory 
action'' under section 3(f) of Executive Order 12866 and therefore was 
reviewed by the Office of Management and Budget for review.

Executive Order 13132

    This regulation will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on distribution of power and responsibilities among the 
various levels of government. Under Executive Order 13132, this rule 
does not have sufficient federalism implications for which we would 
prepare a Federalism Assessment.

Regulatory Flexibility Act

    The Director of the Bureau of Prisons, under the Regulatory 
Flexibility Act (5 U.S.C. 605(b)), reviewed this regulation. By 
approving it, the Director certifies that it will not have a 
significant economic impact upon a substantial number of small entities 
because: This rule is about the correctional management of offenders 
committed to the custody of the Attorney General or the Director of the 
Bureau of Prisons, and its economic impact is limited to the Bureau's 
appropriated funds.

Unfunded Mandates Reform Act of 1995

    This rule will not cause State, local and tribal governments, or 
the private sector, to spend $100,000,000 or more in any one year, and 
it will not significantly or uniquely affect small governments. We do 
not need to take action under the Unfunded Mandates Reform Act of 1995.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by *804 of the Small 
Business Regulatory Enforcement Fairness Act of 1996. This rule will 
not result in an annual effect on the economy of $100,000,000 or more; 
a major increase in costs or prices; or significant adverse effects on 
competition, employment, investment, productivity, innovation, or on 
the ability of United States-based companies to compete with foreign-
based companies in domestic and export markets.

List of Subjects in 28 CFR Parts 506 and 540

    Prisoners.

Harley G. Lappin,
Director, Bureau of Prisons.

0
Under the rulemaking authority vested in the Attorney General in 5 
U.S.C. 552(a) and delegated to the Director, Bureau of Prisons, we add 
a new part 506 to 28 CFR, chapter V, subchapter A, and amend 28 CFR 
part 540 as follows.

Subchapter A--General Management and Administration

0
1. Add a new Part 506 to read as follows:

PART 506--INMATE COMMISSARY ACCOUNT

    Authority: 5 U.S.C. 301; 18 U.S.C. 3621, 3622, 3624, 4001, 4042, 
4081, 4082 (Repealed in part as to offenses committed on or after 
November 1, 1987), 5006-5024 (Repealed October 12, 1984 as to 
offenses committed after that date), 5039; 28 U.S.C. 509, 510; 31 
U.S.C. 1321.


Sec.  506.1  What is the purpose of individual inmate commissary 
accounts?

    The purpose of individual inmate commissary accounts is to allow 
the Bureau to maintain inmates' monies while they are incarcerated. 
Family, friends, or other sources may deposit funds into these 
accounts.


Sec.  506.2  How may family, friends, or other sources deposit funds 
into an inmate commissary account?

    (a) Family and friends must mail deposits to the centralized inmate 
commissary account at the address we provide.
    (1) The deposit envelope must not contain any enclosures intended 
for delivery to the inmate. We may dispose of any enclosure.
    (2) The deposit must be in the form of a money order made out to 
the inmate's full name and complete register number. We will return 
checks to the sender provided the check contains an adequate return 
address.
    (b) Other sources, (such as tax refunds, dividends from stocks, or 
state benefits) must be forwarded for deposit to the centralized inmate 
commissary account.

Subchapter C--Institutional Management

PART 540--CONTACT WITH PERSONS IN THE COMMUNITY

0
1. Revise the authority citation for 28 CFR part 540 to read as 
follows:

    Authority: 5 U.S.C. 301, 551, 552A, 18 U.S.C. 1791, 3621, 3622, 
3624, 4001, 4042, 4081, 4082 (Repealed in part as to offenses 
committed on or after November 1, 1987), 5006-5024 (Repealed October 
12, 1984, as to offenses committed after that date), 5039; 28 U.S.C. 
509.

0
2. Revise Sec.  540.23 to read as follows:


Sec.  540.23  Inmate funds received through the mails.

    Except as provided for in part 506 of this chapter, funds enclosed 
in inmate correspondence are to be rejected. Deposits intended for the 
inmate's commissary account must be mailed directly to the centralized 
commissary account (see 28 CFR part 506).

0
3. Revise Sec.  540.51(h)(3) to read as follows:


Sec.  540.51  Procedures.

* * * * *
    (h) * * *
    (3) The visiting room officer may not accept articles or gifts of 
any kind for an inmate, except packages which have had prior approval 
by the Warden or a designated staff member.
* * * * *
[FR Doc. 04-15071 Filed 7-1-04; 8:45 am]
BILLING CODE 4410-05-P