Comment on FR Doc # 08-00022

March 10, 2008 VIA ELECTRONIC FILING Mr. Bill Brushwood Financial Management Service 401 14th Street, SW Room 400A Washington, DC 20227 Re: Docket Number FISCAL-FMS-2007-0008 Dear Mr. Brushwood: The National Automated Clearing House Association (?NACHA?) appreciates this opportunity to respond to the Notice of Proposed Rulemaking regarding federal government participation in the Automated Clearing House Network (the ?Proposed Rule?) issued by the Financial Management Service (?FMS?). The Proposed Rule would amend the regulation by adopting changes to the NACHA Operating Rules that took effect in 2006 and 2007, with limited exceptions. NACHA appreciates that FMS and the Federal government continue to recognize the value of maintaining consistency between the regulation governing Federal agency payments and the NACHA Operating Rules. NACHA supports the Proposed Rule but seeks clarification regarding FMS? proposed exceptions, as described below. I. COMMENTS Exceptions: (1) Split Disbursements of Federal Employee Travel Payments and (2) Disbursements for Federal Payment Card Programs NACHA requests clarification to the proposal to codify Treasury?s 2005 waiver permitting split disbursements of Federal employee travel payments and disbursements for Federal payment card programs. It is NACHA?s understanding that the Federal government has adopted subsection 4.1.4 of the NACHA Operating Rules permitting a Receiving Depository Financial Institution (?RDFI?) to post Federal payments to a deposit account based upon the account number received with the entry. If this is correct, NACHA requests that the Final Rule clarify that a financial institution, for posting purposes, may rely solely on the account number in any Federal agency ACH entry, and that no requirement for matching the name(s) in the entry to a name(s) on the deposit account is expressed or implied. This would include disbursements for Federal employee travel and Federal payment card programs. Business Checks Ineligible for Conversion One of the amendments to the 2006 NACHA Operating Rules identifies which business checks are ineligible for conversion for ARC and POP entries. The purpose of this amendment was to allow more checks to be converted and give corporations an opportunity to code those checks they did not want converted. Under the rule, checks greater than $25,000 are ineligible to be converted. NACHA appreciates that this amendment addresses problems the agencies previously had in systematically identifying which business checks received in collection streams were ineligible for conversion and, as a result, eliminates the need to address the conversion of business checks in part 210. Voting and Funding Requirements The purpose of the network administration fees implemented in the 2007 NACH Operating Rules is to provide a stable and predictable source of funds for the management of the ACH Network that is paid for by the parties that directly receive the benefits of the services. NACHA appreciates that the Proposed Rule supports this funding mechanism and recognizes the importance in providing for the long term funding of NACHA?s ACH Network administration activities, including risk management and the advancement of rules supporting the ability of entities to convert check payments into ACH entries. ARC and POP Entries NACHA amended the authorization and notice requirements for check conversion remain consistent with Regulation E and its associated commentary, which was revised effective January 1, 2007. The Proposed Rule permits agencies to continue to use the longer disclosures currently required by part 210 or adopt the shorter disclosure language allowed in the NACHA Operating Rules. NACHA appreciates that FMS recognizes the NACHA Operating Rules? shorter disclosure requirements and permits agencies to use this shorter disclosure language if they so choose. Back Office Conversion Entries NACHA amended the NACHA Operating Rules to allow ?eligible? checks to be converted to ACH entries when appropriate notice is provided in person by the payee to the check writer. Back Office Conversion (?BOC?) enables financial institutions that receive a check image from the payee to convert that image into an ACH payment. It also enables financial institutions to permit their customers to create an ACH payment from an image of a check when a copy of the image is kept by either the customer or the financial institution. NACHA appreciates that BOC addresses the Government?s need for flexibility in certain situations and that the amendment obviates the need to retain certain provisions in part 210 permitting check conversion under these circumstances. NACHA is not concerned that FMS is exempting Federal agencies from the self-audit provisions of the NACHA Operating Rules, as this exemption is consistent with FMS? previous position of exempting Federal agencies from these requirements. Minor Operational Efficiency and Return Issue Changes The Proposed Rule adopts those amendments to both the 2006 and 2007 NACHA Operating Rules that have a minor impact on the ACH Network. NACHA appreciates that the Proposed Rule adopts these changes and recognizes that they improve the operation of the ACH Network and the clarity of the NACHA Operating Rules. II. CONCLUSION Thank you for allowing us this opportunity to respond. If I can be of further assistance, please do not hesitate to contact me at (703) 561-3975. Sincerely, Carrie M. Lee Staff Attorney