Regulations Governing FedSelect Checks

AGENCY:

Financial Management Service, Fiscal Service, Treasury.

ACTION:

Final rule; removal.

SUMMARY:

The Financial Management Service (FMS) is removing Part 247 from Title 31 of the Code of Federal Regulations. This Part governs the use of FedSelect checks by Federal agencies in making certain Federal payments. The Debt Collection Improvement Act of 1996 (DCIA) and implementing regulations require that most Federal payments be made electronically after January 1, 1999. The increased use of electronic funds transfer (EFT) has resulted in lower check volumes and reduced Federal agency reliance on non-EFT payment mechanisms. Due to the decrease in check volume and the availability of low cost alternatives to FedSelect, such as third party drafts, FMS has determined that FedSelect is no longer a cost-effective mechanism for making certain Federal government payments and is terminating the program on March 31, 2000.

EFFECTIVE DATE:

This removal of 31 CFR Part 247 is effective April 19, 2000.

FOR FURTHER INFORMATION CONTACT:

Matthew Helfrich, Financial Program Specialist, at (202) 874-6754; Sally Phillips, Senior Financial Program Specialist, at (202) 874-7106; Cynthia L. Johnson, Director, Cash Management Policy and Planning Division, at (202) 874-6590; or James Regan, Attorney-Advisor, at (202) 874-6680.

SUPPLEMENTARY INFORMATION:

On May 16, 1995, FMS published a final rule codified at 31 CFR Part 247 governing the use of FedSelect checks for paying certain obligations of Federal agencies [60 FR 25993]. The final rule included procedural instructions for using FedSelect checks and defined the rights and liabilities of the United States, Federal Reserve Banks, banks, and others in connection with FedSelect checks. FedSelect checks were developed for use by Federal agencies for “on-demand” payment needs. On September 25, 1998, FMS published a final rule in the Federal Register (63 FR 51490), Management of Federal Agency Disbursements, codified at 31 CFR part 208 (EFT rule), implementing certain requirements of the DCIA, Pub. L. 104-134, chap. 10, 110 stat. 1321-358. The EFT rule requires Federal agencies to make most payments by EFT after January 1, 1999.

Because this rule relates to a payment system for Federal agencies, notice and comment are not required pursuant to 5 U.S.C. 553(a)(2) and (b)(A). Moreover, notice and comment are contrary to the public interest because the prompt removal of the current FedSelect regulations will result in savings to taxpayers without adversely affecting federal payments. For these reasons, good cause is found pursuant to 5 U.S.C. 553(d)(3) to make removal of the FedSelect regulations immediately effective. Because notice and comment are not required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601) do not apply. Finally, this rule is not a significant regulatory action for purposes of Executive Order 12866.

The number of Treasury-disbursed, non-tax refund payments made by EFT rose from 55% in FY 1995 to 75% by the close of FY 1999. The number of check payments over this period have decreased correspondingly. Moreover, cost-effective alternatives to FedSelect have emerged, such as third party drafts and government purchase card convenience checks. Due to the decrease in check volume and the growing use of more cost-effective alternatives by Federal agencies, the FedSelect program will be terminated on March 31, 2000.

PART 247—[REMOVED]

For the reasons set out above, 31 CFR Part 247 is removed.

Authority: 31 U.S.C. 3321, 3325, and 3327.