[Federal Register Volume 72, Number 160 (Monday, August 20, 2007)]
[Rules and Regulations]
[Pages 46378-46380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-4053]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 208

RIN 1510-AB07


Management of Federal Agency Disbursements

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: On August 7, 2006, the Financial Management Service (FMS) 
published an interim final rule amending 31 CFR Part 208 (Part 208) to 
facilitate the delivery of Federal payments to victims of disasters and 
emergencies. See 71 FR 44584. The interim final rule was published 
without prior notice and comment and took effect immediately upon 
publication due to the need to be prepared to deliver Federal 
assistance and benefit payments during the 2006 hurricane season. 
However, we invited comments on the interim rule and indicated that we 
would consider all comments received. We have reviewed and considered 
the comments received on the interim rule and are adopting that rule as 
final without change.

DATES: Effective August 20, 2007, the interim rule published on August 
7, 2006 (71 FR 44584) is confirmed as final.

ADDRESSES: You can download this rule at the following Web site: http://www.fms.treas.gov/ach. You may also inspect and copy this rule at: 
Treasury Department Library, Freedom of Information Act (FOIA) 
Collection, Room 1428, Main Treasury Building, 1500 Pennsylvania 
Avenue, NW., Washington, DC 20220. Before visiting, you must call (202) 
622-0990 for an appointment.

FOR FURTHER INFORMATION CONTACT: Sally Phillips, Director, EFT Strategy 
Division, at (202) 874-7106 or

[[Page 46379]]

[email protected]; or Natalie H. Diana, Senior Counsel, at 
(202) 874-6680 or [email protected].

SUPPLEMENTARY INFORMATION: 

Background

    Part 208 implements the provisions of 31 U.S.C. 3332, which 
generally requires that Federal payments be made by electronic funds 
transfer (EFT). Under 31 U.S.C. 3332, the Secretary of the Treasury 
(Secretary) must ensure that any individual required to receive a 
Federal payment by EFT have access to an account at a financial 
institution at a reasonable cost and with certain consumer protections. 
On August 7, 2006, Treasury issued an interim final rule amending Part 
208 in order to facilitate the delivery of Federal benefit and 
assistance payments to victims of emergencies and disasters. The 
purpose of the interim rule was to provide regulatory authority for 
Treasury, in the event of a disaster or emergency, to establish 
accounts at a financial institution for affected individuals in order 
to allow for the delivery by EFT of Federal payments.
    The possibility that a future emergency or disaster could disrupt 
the delivery of Federal payments through conventional methods such as 
direct deposit and check was made apparent by Hurricane Katrina in 
2005. During the aftermath of Hurricane Katrina, many individuals who 
had been displaced from their homes were in immediate need of financial 
assistance. As Hurricane Katrina illustrated, in the extraordinary 
circumstance of a disaster, many individuals may not have access to 
their bank accounts and may not be able to readily establish new bank 
accounts. Such individuals would have no way to receive an electronic 
Federal assistance or benefit payment. Moreover, the postal delivery of 
checks may be delayed or disrupted in a disaster situation, at the very 
time when the expeditious delivery of Federal assistance and benefit 
payments is critical in assisting people in disaster situations who 
urgently need funds in order to pay for food, clothing and shelter. 
Even where Treasury checks can be expeditiously delivered to disaster 
victims, individuals who have been displaced from their homes may be 
unable to establish their identities due to lost or inaccessible 
documentation. As a result, financial institutions may be unwilling to 
cash Treasury checks for these individuals, because they cannot 
determine the identity of the individual or whether a Treasury check 
that an individual is seeking to cash has been stolen and fraudulently 
endorsed. Finally, check payments may raise security concerns in 
disaster situations, since individuals who cash checks will typically 
be carrying significant amounts of cash in order to make purchases.
    In light of these concerns, we published an interim final rule to 
provide regulatory authority for Treasury to establish accounts at 
financial institutions for victims of a disaster or emergency in order 
to allow for the electronic delivery of Federal payments.

Summary and Response to Comments

    We received three comment letters on the interim final rule. One 
comment letter, from a national payments association, expressed support 
for the rule and noted that the rule appears to provide the flexibility 
that would be critical in the event of a future disaster or emergency 
that disrupts the delivery of payments. The letter also urged Treasury 
give advance consideration to issues such as how long accounts would 
remain open, where people would go to open accounts and how ACH files 
would be transferred if there were no electricity and/or 
telecommunications capacity. Another comment letter, from a trade 
association, agreed with the need for flexibility in disaster 
situations but urged Treasury to provide disaster victims with the 
opportunity to receive Federal payments through the financial 
institution of their choosing whenever possible. The letter also urged 
Treasury to use all available communications media to apprise disaster 
victims, the financial services sector and emergency assistance 
organizations of the plan to deliver Federal payments in the aftermath 
of a disaster.
    The third comment letter was from a Federal agency. The agency 
questioned how Treasury could deliver payments electronically in the 
event that the infrastructure supporting direct deposit were disrupted. 
The agency also raised other questions, such as how financial 
institutions would provide account access to disaster victims who do 
not have documentary evidence of their identities. Finally, the agency 
argued that agency relief personnel and individual victims are in the 
best position to decide how disaster relief payments should be 
delivered, and that individuals should not be required to receive 
payments electronically through accounts established for them by 
Treasury.
    We are aware that, depending on the nature of an emergency, the 
delivery of payments by direct deposit could be disrupted by damage to 
the payment system infrastructure. The purpose of the amendment to Part 
208 was to provide Treasury with maximum flexibility for developing 
payment solutions even in the event of disruptions to payment networks, 
electricity and/or telecommunications. For example, in the event that 
the direct deposit network were not operational, it might be possible 
to deliver payments via other established electronic payment networks, 
such as ATM networks and credit/debit card networks, or through other 
means that might be developed depending upon the contingencies of a 
particular situation. In the event that individuals could not provide 
the standard identity documents that financial institutions typically 
require, Treasury would work with benefit and relief agencies and 
financial institutions to issue passwords that disaster victims could 
use to access payments following the agencies' confirmation of victims' 
identities on the basis of verifiable information held by the agency.
    It is important to note that the interim final rule permits, but 
does not require, Treasury to establish accounts for disaster victims. 
Treasury intends to work closely with benefit and relief agencies to 
determine how best to deliver funds in the event of an emergency. 
Because it is impossible to know in advance precisely the circumstances 
that a future disaster or emergency could present, the rule allows the 
terms and conditions of such accounts to be established on the basis of 
whatever is appropriate in a given situation. Thus, for example, 
Treasury might consider establishing accounts for disaster victims 
through which relief and assistance funds could be accessed at ATMs 
and/or point-of-sale locations. Alternatively, in more exigent 
circumstances, Treasury might work with one or more financial 
institutions to provide electronic funds access through proprietary 
arrangements with retailers, charitable organizations or other 
unconventional means of access. The interim final rule gives Treasury 
the authority to quickly establish accounts for disaster and emergency 
victims, as well as the flexibility to determine what features such 
accounts should have in order to meet the needs of agencies and payment 
recipients.

Amendment of Part 208

    The interim rule amended 31 CFR Part 208 by adding a new Sec.  
208.11 that provides that Treasury may establish accounts at financial 
institutions for victims of a disaster or emergency in order to allow 
for the electronic delivery of Federal payments. New Sec.  208.11 gives 
the Secretary flexibility to determine what features such accounts 
should

[[Page 46380]]

have in light of the particular nature of the disaster or emergency. 
Sections 208.4, 208.6, 208.7 and 210.5 of title 31 CFR do not apply to 
the establishment of accounts or issuance of payments pursuant to this 
section. For example, the waivers set forth in Sec.  208.4 are not 
applicable in situations where Treasury is establishing accounts for 
the express purpose of allowing for the delivery by EFT of Federal 
payments to disaster victims. The requirement in Sec. Sec.  208.6 and 
210.5 that a Federal non-vendor electronic payment be deposited to a 
deposit account in the name of the recipient does not apply to accounts 
established pursuant to Sec.  208.11, nor are agencies required to 
notify check recipients and newly-eligible payment recipients of 
options available to them, as is normally required under Sec.  208.7. 
Further, Treasury will be able to deliver payments to accounts 
established pursuant to Sec.  208.11, notwithstanding any other 
instructions from the payment recipient.

Regulatory Analyses

Request for Comment on Plain Language

    On June 1, 1998, the President issued a memorandum directing each 
agency in the Executive branch to write its rules in plain language. 
This directive is effective for all new proposed and final rulemaking 
documents issued on or after January 1, 1999. We invite comment on how 
to make this final 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 this final rule are clear; or (3) whether 
there is something else we could do to make this rule easier to 
understand.

Regulatory Planning and Review

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

Regulatory Flexibility Act Analysis

    Because no notice of proposed rulemaking was required for this 
final rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 
601 et. seq.) do not apply.

List of Subjects in 31 CFR Part 208

    Accounting, Automated Clearing House, Banks, Banking, Electronic 
funds transfer, Financial institutions, Government payments.

Adoption of the Amendment

0
For the reasons set out in the preamble, under the authority of 5 
U.S.C. 301 the interim rule amending 31 CFR Part 208 published at 71 FR 
44584 is adopted as a final rule without change.

    Dated: August 14, 2007.
Kenneth R. Papaj,
Commissioner.
[FR Doc. 07-4053 Filed 8-17-07; 8:45 am]
BILLING CODE 4810-35-M