us federal reserve: e6-20300

8/14/2019 US Federal Reserve: E6-20300

http://slidepdf.com/reader/full/us-federal-reserve-e6-20300 1/9

69430 Federal Register / Vol. 71, No. 231/ Friday, December 1, 2006/ Rules and Regulations

than 200,000,000 bushels shall beentitled to three Board members; and (5)units with 200,000,000 bushels or moreshall be entitled to four Board members.

A proposed rule was published in theFederal Register (71 FR 41741) on July24, 2006, with a 30-day commentperiod. The Department received nocomments.

The increase in representation on theBoard, from 64 to 68 members, is basedon average production levels for theyears 2001–2005 (excluding the crops inyears in which production was thehighest and in which production wasthe lowest) as reported by theDepartment of Agriculture’s NationalAgricultural Statistics Service in the‘‘Crop Production 2005 Summary’’,which was published in January 2006.

The number of geographical unitsremains at 30. This final rule increasesBoard membership from 64 members to68 members effective with 2007

nominations and appointments.This final rule adjusts representationon the Board as follows:

StatePrevious

representa-tion

Currentrepresenta-

tion

Nebraska .......... 3 4North Dakota .... 2 3Pennsylvania .... 1 2Virginia .............. 1 2

List of Subjects In 7 CFR Part 1220

Administrative practice andprocedure, Advertising, Agricultural

research, Marketing agreements,Soybeans and soybean products,Reporting and recordkeepingrequirements.

I For the reasons set forth in thepreamble, Title 7, part 1220 is amendedas follows:

PART 1220—SOYBEAN PROMOTION,RESEARCH, AND CONSUMERINFORMATION

I 1. The authority citation for 7 CFRpart 1220 continues to read as follows:

Authority: 7 U.S.C. 6301–6311.

I 2. In §1220.201, the tableimmediately following paragraph (a) isrevised to read as follows:

§ 1220.201 Membership of board.

(a) * * *

UnitNumber

ofmembers

Illinois ............................................ 4Iowa .............................................. 4Minnesota ..................................... 4Indiana .......................................... 4

UnitNumber

ofmembers

Nebraska ...................................... 4Missouri ........................................ 3Ohio .............................................. 3Arkansas ....................................... 3South Dakota ................................ 3Kansas .......................................... 3

Michigan ....................................... 3North Dakota ................................ 3Mississippi .................................... 2Louisiana ...................................... 2Tennessee .................................... 2North Carolina .............................. 2Kentucky ....................................... 2Pennsylvania ................................ 2Virginia .......................................... 2Maryland ....................................... 2Wisconsin ..................................... 2Georgia ......................................... 1South Carolina .............................. 1Alabama ........................................ 1Delaware ....................................... 1Texas ............................................ 1Oklahoma ..................................... 1

New York ...................................... 1

UnitNumber

ofmembers

Eastern Region (Massachusetts,New Jersey Connecticut, Flor-ida, Rhode Island, Vermont,New Hampshire, Maine, WestVirginia, District of Columbia,and Puerto Rico ........................ 1

Western Region (Montana, Wyo-ming, Colorado, New Mexico,Idaho, Utah, Arizona, Wash-ington, Oregon, Nevada, Cali-

fornia, Hawaii, and Alaska) ....... 1

* * * * *

Dated: November 27, 2006.

Lloyd C. Day,

Administrator, Agricultural Marketing Service.

[FR Doc. E6–20314 Filed 11–30–06; 8:45 am]

BILLING CODE 3410–02–P

NUCLEAR REGULATORYCOMMISSION

10 CFR Part 70

RIN 3150–AH96

Facility Change Process InvolvingItems Relied on for Safety:Confirmation of Effective Date

AGENCY: Nuclear RegulatoryCommission.

ACTION: Direct final rule: Confirmationof effective date.

SUMMARY: The Nuclear RegulatoryCommission (NRC) is confirming theeffective date of December 11, 2006, for

the direct final rule that was publishedin the Federal Register on September27, 2006 (71 FR 56344). This direct finalrule amended the NRC’s regulations toclarify a requirement pertaining to itemsrelied on for safety (IROFS). Thisrulemaking corrected an inconsistencyin the regulations pertaining to IROFS.DATES: The direct final rule published at71 FR 56344, Sept. 27, 2006 is effectiveDecember 11, 2006.ADDRESSES: Documents related to thisrulemaking, including commentsreceived, may be examined at the NRCPublic Document Room, Room O–1F23,11555 Rockville Pike, Rockville, MD.These same documents may also beviewed and downloaded electronicallyvia the rulemaking Web site (http:// ruleforum.llnl.gov ). For informationabout the interactive rulemaking Website, contact Ms. Carol Gallagher (301)415–5905; e-mail [email protected] . FOR FURTHER INFORMATION CONTACT: Dr.

Anthony N. Tse, Office of Federal andState Materials and EnvironmentalManagement Programs, U.S. NuclearRegulatory Commission, Washington,DC 20555, telephone (301) 415–6233 (e-mail: [email protected] ). SUPPLEMENTARY INFORMATION: OnSeptember 27, 2006 (71 FR 56344), theNRC published in the Federal Registera direct final rule amending itsregulations in 10 CFR part 70 to clarifya requirement pertaining to items reliedon for safety (IROFS). In the direct finalrule, NRC stated that if no significantadverse comments were received, the

direct final rule would become final onDecember 11, 2006. The NRC did notreceive any comments that warrantedwithdrawal of the direct final rule.Therefore, this rule will becomeeffective as scheduled.

Dated at Rockville, Maryland, this 27th dayof November, 2006.

For the Nuclear Regulatory Commission.

Michael T. Lesar,

Chief, Rulemaking, Directives, and Editing Branch, Division of Administrative Services,Office of Administration.

[FR Doc. E6–20321 Filed 11–30–06; 8:45 am]


FEDERAL RESERVE SYSTEM

12 CFR Part 205

[Regulation E; Docket No. R–1265]

Electronic Fund Transfers

AGENCY: Board of Governors of theFederal Reserve System.ACTION: Final rule; official staff interpretation.

VerDate Aug<31>2005 13:12 Nov 30, 2006 Jkt 211001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\01DER1.SGM 01DER1

http://ruleforum.llnl.gov/



mailto:[email protected]










69431Federal Register / Vol. 71, No. 231/ Friday, December 1, 2006/ Rules and Regulations

SUMMARY: The Board is amendingRegulation E, which implements theElectronic Fund Transfer Act, and theofficial staff commentary to theregulation. The final rule clarifies thatthe requirement to obtain a consumer’sauthorization to initiate an electronicfund transfer to the consumer’s accountto collect a fee for an EFT or check that

has been returned applies to any personthat intends to collect the fee in thatmanner, and not to the account-holdingfinancial institution. The final rule alsoprovides guidance on the consumernotice requirements when a personinitiates an electronic fund transfer tocollect a returned item fee or engages inan electronic check conversiontransaction. The amendments supersedecorresponding provisions addressingthese issues in the Board’s January 2006final rule and August 2006 interim finalrule.DATES: The final rule is effective January

1, 2007.FOR FURTHER INFORMATION CONTACT:Vivian W. Wong, Attorney, or Ky Tran-Trong or David A. Stein, Counsels,Division of Consumer and CommunityAffairs, Board of Governors of theFederal Reserve System, Washington,DC 20551, at (202) 452–2412 or (202)452–3667. For users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263–4869.SUPPLEMENTARY INFORMATION:

I. Statutory Background

The Electronic Fund Transfer Act

(EFTA or Act) (15 U.S.C. 1693 et seq.),enacted in 1978, provides a basicframework establishing the rights,liabilities, and responsibilities of participants in electronic fund transfer(EFT) systems. The EFTA isimplemented by the Board’s RegulationE (12 CFR part 205). Examples of thetypes of transfers covered by the Actand regulation include transfersinitiated through an automated tellermachine (ATM), point-of-sale (POS)terminal, automated clearinghouse(ACH), telephone bill-payment plan, orremote banking service. The Act and

regulation provide for disclosure of theterms and conditions of an EFT service;documentation of EFTs by means of terminal receipts and periodic accountactivity statements; limitations onconsumer liability for unauthorizedtransfers; procedures for errorresolution; and certain rights related topreauthorized EFTs. Further, the Actand regulation also prescriberestrictions on the unsolicited issuanceof ATM cards and other access devices.

The official staff commentary (12 CFRpart 205 (Supp. I)) interprets the

requirements of Regulation E tofacilitate compliance and providesprotection from liability under Sections915 and 916 of the EFTA for financialinstitutions and persons subject to theAct. 15 U.S.C. 1693m(d)(1). Thecommentary is updated periodically toaddress significant questions that arise.

II. Background and Overview of Comments Received

On January 10, 2006, the Boardpublished a final rule which addressed,among other things, how a payee canobtain a consumer’s authorization toelectronically collect fees for itemsreturned due to insufficient oruncollected funds in the consumer’saccount. 71 FR 1,638 (January 10, 2006)(January 2006 final rule). Authorizationis obtained when notice is provided tothe consumer stating that the fee will becollected by means of an EFT, alongwith a disclosure of the specific amountof the fee, and the consumer goesforward with the underlyingtransaction. See 71 FR at 1,645–46,1,659.

The Board subsequently published aninterim final rule in August 2006(August 2006 interim rule) to clarifycertain provisions in the January 2006final rule. 71 FR 51,451 (August 30,2006). The August 2006 interim rulecorrected an omission in the January2006 final rule to provide that therequirement to obtain a consumer’sauthorization to electronically collectfees for items returned due toinsufficient or uncollected funds in the

consumer’s account applies to theperson initiating an EFT to collect thefee in this manner, and not to theconsumer’s account-holding financialinstitution. The August 2006 interimrule included further guidanceregarding the notice requirement,including how to disclose the amount of the fee when the amount may vary

based on the amount of the underlyingtransaction or other factors. Withrespect to the notice requirements forobtaining authorization at POS for boththe electronic collection of insufficientfunds fees and for electronic check

conversion transactions, the August2006 interim rule clarified that thenotice given to consumers at the time of the transaction may be substantiallysimilar, and need not be identical, to thenotice posted at POS. To give interestedparties an opportunity to comment onthese revisions, the Board solicitedcomment on the August 2006 interimrule.

The Board received 14 commentletters on the August 2006 interim rule.Commenters included banks, creditunions, a check services provider, a

large retailer, and industry tradeassociations, and consumer groups. Thefollowing is a summary of the commentsreceived; the section-by-section analysisdiscusses specific comments in moredetail.

In general, industry commenterssupported the Board’s clarification thatthe notice and authorization

requirements apply to the personseeking to collect the insufficient oruncollected funds fee electronically.They also supported the Board’sclarification that the authorizationrequirement does not apply to any feesfor returned items due to insufficient oruncollected funds imposed on theconsumer’s account by the account-holding institution. Some industrycommenters, however, urged the Boardto reconsider, for operational reasons,the requirements to provide both aposted notice as well as a copy of thatnotice, or substantially similar notice, to

consumers at POS. Industry commentersalso expressed concerns about therequirement to disclose the amount of the fee, particularly when the fee mayvary from state to state. By contrast,consumer groups disagreed with thenotion that a consumer can authorizethe collection of an insufficient fundsfee via an EFT from the consumer’saccount solely by going forward with anunderlying transaction after receivingnotice of the payee’s intent to collect thefee electronically.

III. Summary of the Final Rule

The Board is adopting final revisions

to Regulation E and the staff commentary largely as published in theAugust 2006 interim rule. The rule has

been revised to apply to any feescollected for an EFT or a check that has

been returned unpaid, and is not limitedto fees collected after an item has beenreturned due to insufficient oruncollected funds in a consumer’saccount. Additional clarifications andmodifications have been made torespond to commenters’ concerns.

In addition to explaining that therequirement to obtain the consumer’sauthorization applies to the person

electronically collecting the returneditem fee, the final rule clarifies that if the amount of the fee may vary based onthe transaction amount or on otherfactors, an explanation of how the fee iscalculated may generally be provided.

For POS transactions, the personcollecting the fee must provideconsumers with two separate notices,one that is posted in a prominent andconspicuous location, and a second thatthe consumer may retain. If the fee mayvary depending on the amount of thetransaction or for other reasons, an





1 In an ECK transaction, a merchant or otherpayee takes information from a consumer’s check toinitiate a one-time EFT from the consumer’saccount.

explanation of how that fee isdetermined may be stated on the postednotice. However, if the amount of thefee can be calculated at the time of thetransaction, the person collecting the feemust state the specific fee amount onthe notice given to the consumer. Thefinal rule has been revised to allowpersons that may not be able to provide

a retainable notice at the time of thetransaction (e.g., because they do nothave terminals or registers capable of printing the necessary disclosures) tosend a notice to the consumer’s addressas soon as reasonably practicable afterthe person has initiated an EFT tocollect the fee.

The effective date of the final rule is January 1, 2007. As provided in theAugust 2006 interim rule, to facilitatecompliance and minimize theimplementation costs, the final ruleprovides a one-year delayed compliancedate, until January 1, 2008, for the

requirement to disclose the amount of the returned item fee (or an explanationof how the fee is determined) on thecopy of the notice (or substantiallysimilar notice) provided to theconsumer in connection with a POStransaction.

IV. Section-by-Section Analysis

Section 205.3 Coverage

3(a) General

Section 205.3(a) is being adopted asset forth in the August 2006 interim ruleto incorporate a revision that was

inadvertently omitted from the January2006 final rule. See 71 FR 1,638(January 10, 2006). Specifically,§205.3(a) is revised, pursuant to theBoard’s authority under Sections 904(c)and 904(d)(1) of the EFTA, to clarifythat the requirement in §205.3(b)(3) toobtain a consumer’s authorization tocollect a fee for a returned EFT or checkvia an EFT to the consumer’s accountapplies to any person. See 71 FR at1,645–46. As further discussed under§205.3(b)(3), this amendment clarifiesthat the requirement to obtain theconsumer’s authorization applies to the

person seeking to collect the returneditem fee electronically and not to theconsumer’s account-holding institution.No commenters objected to thisclarification.

3(b) Electronic Fund Transfer

Electronic Check Conversion

Under the January 2006 final rule,merchants and other payees inelectronic check conversion (ECK)transactions are required to obtain theconsumer’s authorization for the one-

time transfer.1 Generally, authorizationfor the ECK transaction is obtainedwhen the payee provides a notice to theconsumer that information from theconsumer’s check received as paymentmay be used to initiate an EFT, and theconsumer goes forward with thetransaction. At POS, the notice must beposted in a prominent and conspicuous

location, and a copy of the notice must be provided to the consumer at the timeof the transaction, such as on a receipt.See §205.3(b)(2); 71 FR at 1,640–41.Model language was provided in the

January 2006 final rule to facilitatecompliance. See Model Clause A–6.

The August 2006 interim ruleclarified that the notice given to theconsumer at the time of the transactionmust be substantially similar to thenotice posted at POS, but need not bean exact copy of the posted notice. Theclarification allows a payee in an ECKtransaction to modify the text of the

notice given to the consumer to makethe notice more meaningful to theconsumer. For example, the payee couldchange the text from ‘‘You authorize usto use information from your check* * * ’’ to ‘‘I authorize you to useinformation from my check * * * .’’ Industry commenters supported therevision, and it is adopted in the finalrule.

Collection of Returned Item FeesThrough an Electronic Fund Transfer

Persons Subject to the Requirement

An EFT from a consumer’s account to

collect a fee for the return of an EFT ora check is covered by Regulation E andmust be authorized by the consumer.Under §205.3(b)(3) of the January 2006final rule, a consumer authorizes theelectronic collection of a fee for areturned EFT or check when theconsumer receives notice of the intent tocollect the fee from the consumer’saccount by EFT, along with a disclosureof the amount of the fee, and goesforward with the underlyingtransaction. See 71 FR at 1,645–46.Although §205.3(b)(3) was intended toapply to the person electronicallycollecting a fee for a returned item, the

rule did not specifically indicate theparty that was required to provide thenotice.

Under §205.3(b)(3)(i) of the August2006 interim rule, the obligation toprovide notice to obtain the consumer’sauthorization applies to the person thatinitiates an EFT to collect the fee, whichtypically would be a merchant or other

payee. However, in some cases this may be a third party, either on behalf of thepayee as the payee’s service provider orafter it has acquired the right to thepayment from the payee. Thus, if theperson that initiates collection of the fee

by an EFT failed to obtain a consumer’sauthorization, the person collecting thefee, and not the consumer’s account-

holding financial institution, hasviolated the regulation.

All commenters addressing thisprovision agreed with the Board’sclarification that the notice andauthorization requirement applies to theperson initiating an EFT to collect thefee, and the final rule reflects thisapproach. However, because an EFT orcheck may be returned for reasons otherthan insufficient or uncollected funds ina consumer’s account, the rule has beenrevised to apply the consumerauthorization requirement moregenerally to any fees collected

electronically when an EFT or check has been returned unpaid. For example, acheck may be returned if the check doesnot bear the consumer’s signature. Inaddition, the reference in §205.3(b)(3)(i)of the August 2006 interim rule referringto the return of an unpaid item ‘‘to thatperson’’ has been deleted toacknowledge that in some cases, theperson collecting the fee will notnecessarily be the merchant or otherpayee, but may instead be a third party.The commentary to the final ruleclarifies that the requirement in§205.3(b)(3) to obtain a consumer’s

authorization to collect a fee for areturned item is not intended to applyto the consumer’s account-holdingfinancial institution when it assesses aseparate fee against the consumer’saccount for returning a check or EFTunpaid or for paying an overdraft. Seecomment 3(b)(3)–1.

Notice Requirements—General

Authorization Requirements

Both the January 2006 final rule andthe August 2006 interim rule providedthat to obtain a consumer’sauthorization to collect a fee for an item

that is returned unpaid due toinsufficient or uncollected funds in theconsumer’s account, notice must first beprovided of the intent to electronicallycollect that fee, and such notice alsomust state the amount of the fee. See§205.3(b)(3)(i); 71 FR 1,645–46.Consumers are deemed to authorize theelectronic collection of the fee if theconsumer goes forward with theunderlying transaction after receivingsuch notice. Payees in accountsreceivable conversion (ARC)transactions will typically provide





written notice on a billing statement orinvoice. See 71 FR at 1,646; 71 FR at51,453. As further discussed below in§205.3(b)(3)(ii), for one-timetransactions at POS, the notice must beposted in a prominent and conspicuouslocation and a copy of the notice must

be provided to the consumer. TheAugust 2006 interim rule also provided

guidance regarding how the amount of the fee can be disclosed if it may varyfrom transaction to transaction. Thefinal rule substantially adopts theseprovisions of the interim rule, withsome modifications to the regulationand commentary text to cover fees forreturned items generally, and to clarifyhow the requirement applies in practice.

Consumer groups objected to thenotion that a consumer authorizes theelectronic collection of a fee for areturned item solely by receiving noticeof the payee’s intent to do so and goingthrough with the underlying

transaction. In their view, a consumermay intend to enter into an underlyingcheck conversion transaction, but is notlikely to anticipate having the itemreturned. Consequently, consumergroups argue that the consumer cannot

be said to intend to authorize a debit tocollect fees associated with the return of the underlying item. Consumer groupswere particularly concerned that theBoard’s rule would facilitate the abilityof Internet payday lenders toelectronically access consumers’ accounts at any time without restrictionsimply by including a clause in the on-line loan agreement providing for such

debits.Under the final rule, a consumer may

authorize a subsequent electroniccollection of a returned item fee whenthe consumer receives notice (or noticeis posted in the case of POStransactions) indicating that possibilityat the time of the underlyingtransaction. See also comment 3(b)(3)– 4, discussed below, addressing hownotice may be provided when theperson collecting the returned item feeis not the merchant or other payee towhom the consumer provides payment.The Board believes that a notice

provided to consumers (or posted onsignage) before a consumer selects apayment method will adequatelyapprise consumers of the possibility thata fee may be debited from their accountsin the event an item is returned unpaid.The prior notice allows the consumer tomake an informed decision aboutwhether to proceed with a particularpayment method (e.g., a checkconversion transaction) or to pay byother means.

The final rule does not addresswhether a person has a substantive right

to collect a returned item fee—that is amatter of state or other law. The Boardfurther notes that other federal or statelaws, such as the Fair Debt CollectionPractices Act, as well as paymentsystem rules may impose additionalsubstantive requirements. In addition,the Board also understands that in somecases, a payee may seek to collect more

than one returned item fee inconnection with a single underlyingitem that has been returned unpaidmore than once. Although Regulation Edoes not prohibit the collection of morethan one fee for a single underlying itemif appropriate notice is provided to theconsumer, such a practice maynevertheless be impermissible undercertain state laws, and could potentiallyraise concerns about unfair or deceptivepractices.

A few industry commenters raisedconcerns about the statement in thesupplementary information for the

August 2006 interim rule that a separatenotice to obtain the consumer’sauthorization must be provided eachtime a payee seeks to collect aninsufficient funds fee for a returneditem. In particular, these commentersexpressed concern that this statementcould be interpreted to require separateconsumer authorizations for each feecollected electronically even when theconsumer has agreed to preauthorizedtransfers for the underlying transactionsunder §205.10(b). For example, aconsumer authorizing monthly debitsunder §205.10(b) may also agree to theelectronic collection of returned item

fees in connection with those debitsunder the terms of the same agreement.The Board did not intend to suggest thatRegulation E requires separate consumerauthorizations for each returned itemfee collected electronically when theconsumer has agreed to preauthorizedtransfers for the underlying transactions.The Board notes, however that, as is thecase for all disclosures under RegulationE, the notice regarding the person’sintent to collect returned item feeselectronically must be clear and readilyunderstandable to the consumer. See§205.4(a). Moreover, if the consumer

later revokes his or her authorizationunder the agreement, the payee mustterminate all subsequent debits underthat authorization. See §205.10(c);comment 10(c)–2.

Disclosure of Returned Item Fees

The final rule also adopts theprovision in the August 2006 interimrule in §205.3(b)(3)(i) permitting theperson collecting a fee for a returnedEFT or check to provide an explanationof how the fee is determined if theamount of the fee may vary based on the

amount of the underlying transaction orother factors. The August 2006 interimrule recognized that state lawsgoverning the maximum fee that may becollected for items returned unpaid arenot uniform. For example, in somestates, the fee may vary based on thetransaction amount or the amount of time the obligation is outstanding. Thus,

persons that intend to collect themaximum amount permitted by statelaw may be unable to disclose a specificdollar amount on a notice that would begiven to all consumers. For example, apayee at POS would be unable to posta notice disclosing a specific fee amountif the fee will vary depending on theamount of the underlying transaction.

Industry commenters generallysupported the flexibility provided by§205.3(b)(3)(i), but a few commentersasserted that the rule continues toimpose unnecessary burden on

businesses operating in multiple states.

The commenters noted that even whenthe amount of the fee is fixed under anapplicable state law, payees would haveto modify their notice in each state.Moreover, the rule could potentiallyresult in lengthy explanations abouthow to calculate the fee which wouldnot necessarily enhance consumerunderstanding. A trade association of finance and treasury professionalsasserted that consumers would receiveadequate disclosure so long as they areprovided a general statement that the feewill not exceed the maximum amountpermitted by applicable state law. TheBoard believes, however, that merely

disclosing that a fee will be collected inan amount that is in accordance withstate law would not provide consumerswith sufficient detail about the fee

because consumers are unlikely to befamiliar with the limits establishedunder the state law governing theindividual transaction. The vagueness of such a disclosure would thus make itdifficult for consumers to later reconcileany debits to collect the fee withinformation on their periodicstatements. Accordingly, the Board isadopting §205.3(b)(3)(i) as set forth inthe August 2006 interim rule to require

disclosure of the fee (or an explanationof how that fee is determined where thefee amount may vary from transaction totransaction). Thus, the rule wouldrequire for example, a merchant or otherpayee that does business in twodifferent states, one of which allows amaximum returned item fee of $25, andthe other allowing a maximum fee of $35, to disclose the specific fee thatwould be collected electronically ineach state.

Comment 3(b)(3)–2 is adopted largelyas proposed and provides an example of





how the rule would apply when aperson seeks to collect a returned itemfee electronically in connection with anARC transaction. The comment has beenrevised in the final rule to clarify thatthe term ‘‘ARC transaction’’ may alsocover situations where a consumermakes an in-person payment for aninvoice at the payee’s physical location

(e.g., when a consumer goes to a bank branch to make a loan payment at ateller window) or leaves the payment ina dropbox, instead of mailing thepayment to the payee. Thesecircumstances would thus not be subjectto the notice requirements for POStransactions under §205.3(b)(3)(ii).

To facilitate compliance, ModelClause A–8 of Appendix A in the finalrule includes model language thatpayees may use to disclose their intentto collect a fee for an EFT or checkreturned unpaid electronically and theamount of the fee. The model language

is modified from the wording used inthe August 2006 interim rule to apply toall types of returned item fees and toreflect that in some cases the personcollecting the fee may not be themerchant or other payee to whom theconsumer has provided payment. Onecommenter expressed concern that statelaw may require the person collectingthe fee to use specific wording for suchnotices, which might be inconsistentwith the Board’s model language. Whileuse of the model language wouldprovide a safe harbor for personsseeking to collect returned item fees

electronically, the regulation does notmandate use of the model language.Thus, a person may comply with therule without using the Board’s modellanguage so long as that person apprisesthe consumer that the fee will becollected electronically and states theamount of the fee (or how the fee isdetermined).

Notice Requirements—POSTransactions

Forms of Notice

Under the August 2006 interim rule,payees at POS must post notice of their

intent to electronically collect a fee fora returned EFT or check (along with theamount of the fee) in a prominent andconspicuous location, and a copy of thenotice, or substantially similar notice,must be provided to the consumer at thetime of the transaction, such as on thesales receipt. See §205.3(b)(3)(ii). If theamount of the fee to be collectedelectronically can be determined at thetime of the transaction, the noticeprovided to the consumer must state thespecific amount of the fee. The final rulegenerally adopts the approach set forth

in the interim rule in §205.3(b)(3)(ii), but allows a payee to mail a notice toa consumer’s address as an alternativeto providing a consumer a retainablenotice at the time of the transaction.

One large retailer urged the Board toallow payees to choose a single methodfor notifying consumers about the fee,either posting a notice at POS or

providing consumers with such noticevia a receipt. This retailer stated that thecosts of providing both forms of noticeto consumers at POS would be asignificant barrier to wider industryadoption of ACH payment methods and,moreover, that the information providedin the notices was irrelevant to the vastmajority of consumers who do not havechecks returned. A vendor of checkprocessing services commented thatsome merchants do not convert checksreceived at POS but may neverthelesscollect fees electronically if an item isreturned unpaid. According to this

commenter, merchants that do notconvert checks are unlikely to upgradetheir registers to provide consumerswith receipts containing the requireddisclosures. As a result, the commenterstated that the interim rule wouldprevent these merchants from being ableto collect such fees by means of an EFT,a process that is considerably moreefficient than other traditionalcollection methods, such as processinga demand draft (or remotely createdcheck). This commenter suggested thatthe Board allow merchants to send anotice to the consumer after thetransaction occurs but before any debit

to the consumer’s account to collect theinsufficient funds fee. Because a veryhigh percentage of checks are paid whenpresented, the commenter noted that thenotice would thus only have to bemailed to the small number of consumers for whom the notice would

be relevant, i.e., those who have theirchecks or other items returned.

The final rule adopts §205.3(b)(3)(ii)largely as set forth in the interim rulewith a minor change to the rule text torefer to the person ‘‘initiating an EFT’’ to collect the insufficient funds fee forconsistency with the general rule in

§205.3(b)(3)(i). In addition,§205.3(b)(3)(ii) has been revised toallow a person collecting returned itemfees electronically to subsequently senda copy of the posted notice (or asubstantially similar notice) toconsumers instead of providing a noticeat the time of the transaction. Personscollecting the fee would still be requiredto post notice of their intent to collectfees for returned items and a disclosureof the amount of the fee (or adescription of how that fee isdetermined). The revised rule, however,

permits persons that may not be able toprovide notices at the time of thetransaction (for example, because theydo not have registers or terminalscapable of printing receipts or of providing the required notices) theflexibility to collect any resultingreturned item fees electronically. Theflexibility provided in the revised rule

would also be available for personswho, for operational or other reasons,choose not to provide notices at the timeof the transaction. The Board believesthat the purpose served by the noticegiven to the consumer, that is, toprovide a source of information aboutthe fee that the consumer can refer tolater (e.g., if necessary to reconcile withentries on a periodic statement), canalso be accomplished by permitting thepayee to mail the notice at a later time.This alternative has the added benefit of providing notice only to thoseconsumers for whom the notice is

particularly relevant. Persons electing tomail notices to a consumer’s addressmust send the notice as soon asreasonably practicable after the personinitiates an EFT to collect the fee fromthe consumer’s account. Thus, given thenotice’s intended purpose of providingthe consumer information about thedebit, the final rule does not require thenotice to be sent prior to the initiationof the EFT to collect the fee. If, however,the person does not provide a consumerwith a notice at the time of thetransaction and is unable to mail anotice because, for example, the

consumer’s check does not bear theconsumer’s address, the person would

violate the rule. Similarly, in a debitcard transaction where the consumer’saddress typically would not becollected, the person collecting thereturned item fee would violate the ruleif it does not provide the consumer acopy of the notice regarding the fee, ora substantially similar notice, either atthe time of the transaction or in asubsequent mailing.

Comment 3(b)(3)–4 is added in thefinal rule to address the situation wherethe merchant or other payee to whom

the underlying payment is made is notthe same person that collects a returneditem fee electronically if the payment isreturned. Because the obligation toobtain the consumer’s authorization forthe EFT debit falls on the personcollecting the fee in this manner,comment 3(b)(3)–4 states that the personinitiating the EFT to the consumer’saccount to collect the fee may providethe requisite notices under §205.3(b)(3)through a third party, such as amerchant. For example, the personelectronically collecting a returned item





fee could have the merchant at POS postthe required signage and provide aretainable copy of the notice to theconsumer on the person’s behalf.

Disclosure of Returned Item Fee for POSTransactions

Under §205.3(b)(3)(ii) of the August2006 interim rule, if the dollar amount

of the fee can be calculated at the timeof the transaction, the copy of the notice(or substantially similar notice)provided to the consumer at the time of the transaction must state that dollaramount, rather than an explanation of how that fee is determined. Thisprovision is adopted generally as setforth in the August 2006 interim rule.Persons that elect to send notices to aconsumer’s address are required to statethe amount of the fee being collected atthe time the notice is mailed. Comment3(b)(3)–3 illustrates, by way of example,how a person would disclose theamount of any fees assessed for areturned item in connection with a POStransaction.

Industry commenters continued toraise concerns about the costs of reprogramming terminals at POS toprovide the amount of the fee on thenotice provided to the consumer at thetime of the transaction and urged theBoard to delete the requirement. TheBoard believes the one-year delayedcompliance date, discussed below,should significantly reduce theimplementation costs and has retainedthe requirement to disclose the fee onthe retainable notice in the final rule.

Moreover, the alternative describedabove permitting the person collectingthe fee to send a notice by mail after thetransaction should further reduce thecosts of compliance.

Delayed Compliance Date for FeeDisclosures Provided to Consumers atPOS Terminals

The Board provided a one-yeardelayed compliance date for therequirement to disclose the amount of the fee on the notice given to theconsumer to minimize the expenseassociated with reprogramming

terminals by the January 1, 2007compliance date. No commentersobjected to the delayed compliance dateand it is adopted as proposed. Thedelayed compliance date applieswhether the retainable notice isprovided at the time of the transactionor subsequently sent to the consumer.

One industry commenter alsosuggested extending the delayedcompliance date to other requirementsof the August 2006 interim rule. Giventhat payees will already have hadapproximately one year to implement

the other requirements, and becausethose requirements do not present thesame programming issues as thedisclosure of the amount of the fee onthe notice given to consumers, the

January 1, 2007 compliance date isretained. Accordingly, this delayedcompliance provision is limited solelyto the disclosure on the retainable

notice given to the consumer regardingthe amount of the returned item fee thatmay be collected and does not apply tothe requirement to disclose the payee’sintent to electronically collect the fee onthat notice. The delayed compliancedate also does not apply to therequirement to provide the amount of the fee, or an explanation of how the feeis determined, on the posted notice.

V. Final Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5U.S.C. 601 et seq.) (RFA) generallyrequires an agency to perform anassessment of the impact a rule isexpected to have on small entities.However, under section 605(b) of theRFA, 5 U.S.C. 605(b), the regulatoryflexibility analysis otherwise requiredunder section 604 of the RFA is notrequired if an agency certifies that therule will not have a significanteconomic impact on a substantialnumber of small entities, and providesa statement providing the factual basisfor such certification. Based on itsanalysis and for the reasons stated

below, the Board certifies that the finalrule will not have a significanteconomic impact on a substantial

number of small entities.1. Statement of the need for, and

objectives of, the final rule. The EFTAwas enacted to provide a basicframework establishing the rights,liabilities, and responsibilities of participants in electronic fund transfersystems. The primary objective of theEFTA is the provision of individualconsumer rights. 15 U.S.C. 1693. TheEFTA authorizes the Board to prescriberegulations to carry out the purpose andprovisions of the statute. 15 U.S.C.1693b(a). The Act expressly states thatthe Board’s regulations may contain‘‘such classifications, differentiations, orother provisions, * * * as, in the

judgment of the Board, are necessary orproper to effectuate the purposes of [theAct], to prevent circumvention orevasion [of the Act], or to facilitatecompliance [with the Act].’’ 15 U.S.C.1693b(c). The Act also states that ‘‘[i]f electronic fund transfer services aremade available to consumers by aperson other than a financial institutionholding a consumer’s account, theBoard shall by regulation assure that thedisclosures, protections,

responsibilities, and remedies created by [the act] are made applicable to suchpersons and services.’’ 15 U.S.C.1693b(d). The Board believes that therevisions to Regulation E discussed

below are within Congress’s broad grantof authority to the Board to adoptprovisions that carry out the purposes of the statute.

The Board is revising Regulation E toclarify that a person that intends tocollect a fee for a returned EFT or check

by means of an EFT from a consumer’saccount must obtain the consumer’sauthorization. Authorization is obtainedwhen the person collecting the feeelectronically provides a written notice(or posts the notice in the case of a POStransaction) of the intent to collect thefee electronically, along with adisclosure of the dollar amount of thefee, and the consumer goes forward withthe underlying transaction afterreceiving that notice. This requirement

would allow consumers to receive priornotice of a person’s intent toelectronically collect a returned item feeand enable the Board to promoteconsistency in the notice provided toconsumers.

In response to industry requests forflexibility with respect to therequirement to provide consumers witha copy of the notice posted at POSinforming them of the person’s intent toelectronically collect a returned itemfee, the final rule states that personsmay provide a notice that issubstantially similar to the postednotice. A parallel revision is made with

respect to the electronic checkconversion requirements at POS.Accordingly, payees may provideconsumers with a notice that issubstantially similar to the noticeposted at POS informing consumers thatthe payee may convert checks receivedas payment to EFTs.

In addition, to address state laws that,for example, permit a fee for returneditems to be imposed based on apercentage of the underlying transaction(rather than a flat fee regardless of thetransaction amount), the final rulepermits persons collecting the fee to

disclose a description of how the feewill be determined in lieu of an actualdollar amount. However, if the dollaramount of the fee can be calculated atthe time the notice is given to theconsumer, this amount must be statedon the version of the notice provided tothe consumer. In response to concernsabout the costs of implementing systemsto provide a copy of the posted noticeor substantially similar notice to theconsumer at the time of a POStransaction with the dollar amount of the fee, or an explanation of how such





fee would be calculated if the fee mayvary based on the underlyingtransaction amount or other factors, thefinal rule permits persons to send suchnotice to a consumer’s address at a latertime.

2. Issues raised by comments inresponse to the initial regulatory

flexibility analysis. In accordance with

section 603(a) of the RFA, the Boardconducted an initial regulatoryflexibility analysis in connection withthe September 2004 proposal (69 FR55,996 (September 17, 2004)). Inaccordance with section 604(a) of theRFA, the Board also conducted a finalregulatory flexibility analysis inconnection with its January 2006 finalrule (71 FR 1,638 (January 10, 2006))and with its August 2006 interim rule(71 FR 51,451 (August 30, 2006)). TheBoard did not receive any comments onany of these regulatory flexibilityanalyses specifically with respect to the

disclosure of a person’s intent toelectronically collect a returned item

fee. However, one commenter, a majorprovider of check processing services, inresponse to the September 2004proposal, noted that in general anychanges to the authorization languageprovided to consumers in electroniccheck conversion transactions at POSlocations would entail re-programmingof the terminals typically used toprovide notices and obtain theconsumer’s authorization. In response tothe August 2006 interim rule, threecommenters, including the sameprovider of check processing services,

asserted that it will be costly toreprogram POS terminals to state theamount of the returned item fee thatwould be collected electronically.

3. Small entities affected by the final rule. Persons that initiate one-time EFTsfrom a consumer’s account toelectronically collect a fee for itemsreturned unpaid will be required underthe regulation to obtain the consumer’sauthorization for the transfer. Theperson that initiates the EFT to debit theconsumer’s account for the fee mustprovide written notice of the intent tocollect the fees electronically and

disclose the dollar amount of the fee.For ARC transactions, notice will likely be provided on a billing statement orinvoice. At POS, notice must beprovided by posted signage, and a copyof the notice or a substantially similarnotice must be given to the consumereither at the time of the transaction orsent at a later time.

The Board believes many small businesses that electronically collectfees for returned items are currentlyproviding written notices regarding theintent to collect such fees electronically,

either on posted signage or on atransaction receipt at POS, and possibly

both. Similarly, the Board believes thatpayees are providing written notices inARC transactions because paymentsystem rules currently require writtennotices. Therefore, small entitiesaffected by this final rule are unlikely tohave to craft entirely new notices as a

result of this rule. Although they willhave to review, and likely revise, theirexisting notices, includingreprogramming the terminals used togenerate these notices, the Board doesnot expect that the burden associatedwith these tasks will be significant. Tofurther facilitate compliance, the Boardprovided model language for the noticerequirement in this final rule. Inaddition, the final rule extends for oneyear, the compliance date for therequirement to disclose the dollaramount of the returned item fee on theretainable notice provided to the

consumer to allow additional time forany necessary programming changes.For fees collected in connection withreturned items in a POS transaction, thefinal rule also permits the personcollecting the fee to mail a copy of thenotice regarding electronic collection of fees for returned items at a later time asan alternative to providing a copy of such notice at the time of the underlyingtransaction. Therefore, small entitiesthat do not currently have systems inplace to provide the notice at the timeof the transaction need not invest innew systems at POS to comply with the

rule.4. Other federal rules. The Board hasnot identified any federal rules thatduplicate, overlap, or conflict with thefinal revisions to Regulation E.

VI. Paperwork Reduction Act

In accordance with the PaperworkReduction Act (PRA) of 1995 (44 U.S.C.3506; 5 CFR 1320 Appendix A.1), theBoard reviewed the rule under theauthority delegated to the Board by theOffice of Management and Budget(OMB). The final rule containsrequirements subject to the PRA. The

collection of information that isrequired by this rule is found in 12 CFR205.3(b)(3). The Federal Reserve maynot conduct or sponsor, and anorganization is not required to respondto, this information collection unless theinformation collection displays acurrently valid OMB control number.The OMB control number is 7100–0200.This information is required to provide

benefits for consumers and is mandatory(15 U.S.C. 1693 et seq.). Therespondents/recordkeepers are for-profitfinancial institutions, including small

businesses. Institutions are required toretain records for 24 months.

All persons, such as merchants andother payees, that may collect a returneditem fee via an EFT from the consumer’saccount potentially are affected by thiscollection of information, because thesepersons will be required to obtain aconsumer’s authorization for theelectronic transfer under §205.3(b)(3).

Burden with respect to therequirement to provide notice to theconsumer for the purpose of obtainingthe consumer’s authorization for theelectronic collection of fees for returneditems was previously estimated in the

January 2006 final rule (Docket No. R– 1210 and R–1234), and reported inaccordance with those estimates indocuments filed with OMB. Under theBoard’s prior analysis, the total burdenunder Regulation E, including but notlimited to the burden of obtaining aconsumer’s authorization to collect a

returned item fee electronically as aresult of the January 2006 final rule asfurther amended by this final rule, is1,252,684 hours. The burden estimatecomprises the total paperwork burdenfor all persons subject to the regulationand is not limited to the burden for the1,289 respondents regulated by theFederal Reserve that are required tocomply with Regulation E.

Because the records would bemaintained by the institutions and thenotices are not provided to the FederalReserve, no issue of confidentialityarises under the Freedom of Information

Act.Text of Final Revisions

Comments are numbered to complywith Federal Register publication rules.

List of Subjects in 12 CFR Part 205

Consumer protection, Electronic fundtransfers, Federal Reserve System,Reporting and recordkeepingrequirements.

I For the reasons set forth in thepreamble, the interim final ruleamending 12 CFR part 205 and theOfficial Staff Commentary which waspublished at 71 FR 51451 on August 30,2006, is adopted as a final rule with thefollowing changes:

PART 205—ELECTRONIC FUNDTRANSFERS (REGULATION E)

I 1. The authority citation for part 205continues to read as follows:

Authority: 15 U.S.C. 1693b.

I 2. In §205.3, paragraphs (a) and(b)(2)(ii) are republished, and (b)(3) isrevised as follows:





rather than state a specific dollaramount for the fee.

3. Disclosure of dollar amount of fee for POS transactions. The noticeprovided to the consumer in connectionwith a POS transaction under§205.3(b)(3)(ii) must state the amount of the fee for a returned item if the dollaramount of the fee can be calculated at

the time the notice is provided ormailed. For example, if notice isprovided to the consumer at the time of the transaction, if the applicable statelaw sets a maximum fee that may becollected for a returned item based onthe amount of the underlyingtransaction (such as where the amountof the fee is expressed as a percentageof the underlying transaction), theperson collecting the fee must state theactual dollar amount of the fee on thenotice provided to the consumer.Alternatively, if the amount of the fee to

be collected cannot be calculated at the

time of the transaction (for example,where the amount of the fee will dependon the number of days a debt continuesto be owed), the person collecting thefee may provide a description of howthe fee will be determined on both theposted notice as well as on the noticeprovided at the time of the transaction.However, if the person collecting the feeelects to send the consumer notice afterthe person has initiated an EFT tocollect the fee, that notice must state theamount of the fee to be collected.

4. Third party providing notice. Theperson initiating an EFT to a consumer’s

account to electronically collect a fee foran item returned unpaid may obtain theauthorization and provide the noticesrequired under §205.3(b)(3) throughthird parties, such as merchants.

* * * * *

By order of the Board of Governors of theFederal Reserve System, November 27, 2006.

Jennifer J. Johnson,

Secretary of the Board.

[FR Doc. E6–20300 Filed 11–30–06; 8:45 am]


DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA–2006–25186; AirspaceDocket No. 06–AAL–18]

RIN 2120–AA66

Re-Designation of VOR Federal AirwayV–431; Alaska

AGENCY: Federal AviationAdministration (FAA), DOT.

ACTION: Final rule; technicalamendment.

SUMMARY: This technical amendmentcorrects a final rule published in theFederal Register on July 7, 2006 (71 FR38516), Docket No. FAA–2005–20551,Airspace Docket No. 06–AAL–18. Inthat rule, the reference to Docket No.

FAA–2005–20551 as published was inerror. The correct Docket No. is FAA– 2006–25186. Also, the reference to FAAOrder 7400.9 was published as FAAOrder 7400.9O. The correct reference isFAA Order 7400.9P. Additionally, thecorresponding date that refers to thedate the Order was effective should state‘‘September 15, 2006’’ instead of ‘‘September 16, 2006’’.

DATES: Effective Date: 0901 UTC,December 1, 2006. The Director of theFederal Register approves thisincorporation by reference action under1 CFR part 51, subject to the annual

revision of FAA Order 7400.9 andpublication of conforming amendments.

FOR FURTHER INFORMATION CONTACT:Tracy Rosgen, Airspace and Rules,Office of System Operations Airspaceand AIM, Federal AviationAdministration, 800 IndependenceAvenue, SW., Washington, DC 20591;telephone: (202) 267–8783.

SUPPLEMENTARY INFORMATION:

History

On July 7, 2006, a final rule waspublished in the Federal Register,Docket No. FAA–2005–20551, Airspace

Docket No. 06–AAL–18, that amendedTitle 14 Code of Federal Regulationspart 71 by re-designating VOR FederalAirway V–431, AK (71 FR 38516). Inthat rule, the reference to Docket No.FAA–2005–20551 is incorrect. Thecorrect Docket No. is FAA–2006–25186.Also, the reference to FAA Order 7400.9was published as FAA Order 7400.9O.The correct reference is FAA Order7400.9P. Additionally, thecorresponding date that refers to thedate the Order was effective should state‘‘September 15, 2006’’ instead of ‘‘September 16, 2006’’.

Amendment to Final RuleAccordingly, pursuant to the

authority delegated to me, the referenceto FAA Order 7400.9 for AirspaceDocket No. FAA–2005–20551, AirspaceDocket No. 06-AAL–18, as published inthe Federal Register on July 7, 2006 (71FR 38516), is corrected as follows:

1. On page 38516, in column 3, in theheading of the document, following 14CFR Part 71, ‘‘Docket No. FAA–2005– 20551’’ is corrected to read ‘‘Docket No.FAA–2006–25186’’.

2. On page 38517, in column 1, in thesecond paragraph following the rulesection, in line 3, ‘‘FAA Order 7400.9O’’ is corrected to read ‘‘FAA Order7400.9P’’, and in line 4, ‘‘September 16,2006’’ is corrected to read ‘‘September15, 2006’’.

§71.1 [Corrected]

3. On page 38517, in column 2, inamendatory instruction 2, in line 2,‘‘FAA Order 7400.9O’’ is corrected toread ‘‘FAA Order 7400.9P’’, and in line5, ‘‘September 16, 2006’’ is corrected toread ‘‘September 15, 2006’’.

Issued in Washington, DC, on November22, 2006.

Edith V. Parish,

Manager, Airspace and Rules.

[FR Doc. E6–20279 Filed 11–30–06; 8:45 am]


DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 97

[Docket No. 30524; Amdt. No. 3195]

Standard Instrument ApproachProcedures; MiscellaneousAmendments

AGENCY: Federal AviationAdministration (FAA), DOT.

ACTION: Final rule.

SUMMARY: This amendment amendsStandard Instrument ApproachProcedures (SIAPs) for operations atcertain airports. These regulatoryactions are needed because of changesoccurring in the National AirspaceSystem, such as the commissioning of new navigational facilities, addition of new obstacles, or changes in air trafficrequirements. These changes aredesigned to provide safe and efficientuse of the navigable airspace and topromote safe flight operations underinstrument flight rules at the affectedairports.

DATES: This rule is effective December 1,2006. The compliance date for eachSIAP is specified in the amendatoryprovisions.

The incorporation by reference of certain publications listed in theregulations is approved by the Directorof the Federal Register as of December1, 2006.

ADDRESSES: Availability of matterincorporated by reference in theamendment is as follows:

For Examination— 1. FAA Rules Docket, FAA

Headquarters Building, 800
