1. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

   1. (1) Authorization form--The form designed by the comptroller that is used in accordance with this section.
   2. (2) Comptroller--The comptroller of public accounts for the State of Texas.
   3. (3) Credit entry--An electronic funds transfer that the comptroller initiates to an EFT account.
   4. (4) Custodial state agency--The participating state agency to which a vendor or a participating vendor submitted a properly completed authorization form to designate an EFT account.
   5. (5) Debit entry--A reversal of a credit entry.
   6. (6) EFT account--An account that has been designated in accordance with this section to receive credit entries from participating state agencies.
   7. (7) Electronic funds transfer system--The system authorized by the Government Code, §403.016, that the comptroller uses to initiate payments instead of issuing warrants.
   8. (8) Include--A term of enlargement and not of limitation or exclusive enumeration. The use of the term does not create a presumption that components not expressed are excluded.
   9. (9) May not--A prohibition. The term does not mean "might not" or its equivalents.
   10. (10) Participating state agency--A state agency for which the comptroller and the state treasurer have agreed to initiate credit entries in payment of the agency's obligations to certain vendors. The term includes the comptroller.
   11. (11) Participating vendor--A vendor that receives credit entries initiated by the comptroller.
   12. (12) Paying state agency--With respect to a particular credit or debit entry, the state agency that requested the comptroller to initiate the entry.
   13. (13) Rules--The requirements of the National Automated Clearing House Association concerning cash concentration disbursement, the Federal Reserve System's Regulation E, and the sections of this undesignated head.
   14. (14) State agency--A governmental entity that submits payment vouchers to the comptroller to request payments by the comptroller on behalf of the entity to the persons or entities named on the vouchers.
   15. (15) Vendor--An individual or entity other than a state employee, an annuitant, or a governmental entity as defined by §§5.13-5.15 of this title (relating to Claims Processing--Electronic Funds Transfers).

2. (b) Participation.

   1. (1) Obtaining authorization forms. Except as provided in subsection (c)(3) and (5) of this section, a vendor or a participating vendor may obtain an authorization form from any participating state agency.
   2. (2) Becoming a participating vendor. A vendor may become a participating vendor only by properly designating an EFT account in accordance with subsection (c)(1) of this section.

   3. (3) Agreements with participating state agencies. A participating vendor and a participating state agency may agree on which payments from the agency will be made through the electronic funds transfer system. Unless the comptroller is a party to the agreement:

      1. (A) the comptroller is not required to take any actions to facilitate or ensure the agency's compliance with the agreement; and
      2. (B) the comptroller is not liable for any damages that result from the agency's failure to comply with the agreement.

   4. (4) A participating vendor's termination of its participation.

      1. (A) A participating vendor may terminate its participation only by terminating the designation of each of the vendor's EFT accounts in accordance with subsection (c)(3) of this section.
      2. (B) The comptroller may not initiate a credit entry to a participating vendor on or after the effective date of the termination of the designation of the vendor's last EFT account.

   5. (5) A custodial state agency's termination of a participating vendor's participation.

      1. (A) A custodial state agency may terminate a participating vendor's participation only if the agency is the only custodial state agency for the vendor.
      2. (B) If a custodial state agency is the only custodial state agency for a participating vendor, then the agency may terminate the vendor's participation by terminating the designation of each of the vendor's EFT accounts in accordance with subsection (c)(4) of this section.
      3. (C) The comptroller may not initiate a credit entry to a vendor on or after the effective date of the termination of the designation of the vendor's last EFT account.
      4. (D) A participating vendor's participation may be terminated under this paragraph without prior notice to the vendor.

   6. (6) Inquiries.

      1. (A) A participating vendor must contact the paying state agency before contacting the comptroller when the vendor has a question about a particular credit entry or debit entry.
      2. (B) If a participating vendor receives an unidentified credit entry or debit entry, the vendor must first contact its financial institution to obtain necessary information about the entry. If the institution is unable to provide the information, then the vendor may ask the comptroller for the information.
      3. (C) A participating vendor may contact any participating state agency if the vendor has a question about this section.
   7. (7) Rules. A participating vendor shall comply with the rules as amended from time to time.

3. (c) EFT accounts.

   1. (1) Designating an EFT account.

      1. (A) A vendor or a participating vendor may designate an EFT account if:

         1. (i) the vendor or the participating vendor properly completes an authorization form and submits the form to a participating state agency;
         2. (ii) the account to be designated as an EFT account is a checking or savings account of the vendor or the participating vendor; and
         3. (iii) the account to be designated as an EFT account would be at a financial institution that allows credit entries to be made to the account.
      2. (B) A custodial state agency shall promptly submit a properly completed authorization form or the information on the form to the comptroller in accordance with the comptroller's requirements.
      3. (C) If a vendor or a participating vendor properly designates an EFT account, the effective date of the designation is the fourteenth calendar day after the comptroller processes the information on the authorization form. The comptroller may initiate credit entries to the EFT account on or after the effective date.

   2. (2) Multiple EFT accounts.

      1. (A) A participating vendor may not designate more than one EFT account unless the vendor obtains the comptroller's prior written consent for each account beyond the first account.
      2. (B) This subparagraph applies only if a participating vendor has already designated an EFT account and received the comptroller's permission to designate an additional account. The vendor may designate the additional account by properly completing an authorization form and submitting the form to either the custodial state agency for the first account or any other participating state agency.

      3. (C) A participating state agency may not submit a participating vendor's authorization form to the comptroller if:

         1. (i) the form would designate an EFT account for the vendor;
         2. (ii) the vendor has already designated an EFT account; and
         3. (iii) the vendor has not provided to the agency a copy of the comptroller's written consent for the designation of the additional account.

      4. (D) A participating state agency may not submit a participating vendor's authorization form to the comptroller if:

         1. (i) the form would designate an EFT account for the vendor; and
         2. (ii) the vendor has already designated the same account as an EFT account.
      5. (E) A participating state agency is not prohibited from being the custodial state agency for more than one EFT account of a participating vendor.

      6. (F) A participating vendor that has multiple EFT accounts and a participating state agency may agree that a certain type of payment from the agency will be made only to the EFT account or accounts designated in the agreement. Unless the comptroller is a party to the agreement:

         1. (i) the comptroller is not required to take any actions to facilitate or ensure the agency's compliance with the agreement; and
         2. (ii) the comptroller is not liable for any damages that result from the agency's failure to comply with the agreement.

   3. (3) A participating vendor's termination of the designation of an EFT account.

      1. (A) A participating vendor may terminate the vendor's designation of an EFT account only by:

         1. (i) obtaining an authorization form from the custodial state agency for the account;
         2. (ii) properly completing the form; and
         3. (iii) submitting the form to the agency.
      2. (B) A custodial state agency shall promptly submit a properly completed authorization form or the information on the form to the comptroller in accordance with the comptroller's requirements.
      3. (C) The comptroller may not initiate a credit entry to an EFT account on or after the date on which the comptroller processes the information on the authorization form that terminates the designation of the account.

   4. (4) A custodial state agency's termination of the designation of an EFT account.

      1. (A) A participating state agency may terminate the designation of an EFT account if:

         1. (i) the agency is the custodial state agency for the account; and
         2. (ii) the agency properly completes an authorization form and submits the form or the information on the form to the comptroller in accordance with the comptroller's requirements.
      2. (B) The comptroller may not initiate a credit entry to an EFT account on or after the date on which the comptroller processes the information on the authorization form that terminates the designation of the account.
      3. (C) The designation of an EFT account may be terminated under this paragraph without prior notice to the vendor or the participating vendor that owns the account.

   5. (5) Modifying information about an EFT account.

      1. (A) A participating vendor may modify information about an EFT account of the vendor only by:

         1. (i) obtaining an authorization form from the custodial state agency for the account;
         2. (ii) properly completing the authorization form; and
         3. (iii) submitting the authorization form to the custodial state agency.
      2. (B) A custodial state agency shall promptly submit a properly completed authorization form or the information on the form to the comptroller in accordance with the comptroller's requirements.
      3. (C) New information about an EFT account applies to credit entries that the comptroller initiates on or after the fourteenth calendar day after the comptroller processes the information on the authorization form that provides the new information.

4. (d) The comptroller's powers and responsibilities.

   1. (1) Initiating credit entries.

      1. (A) The comptroller may initiate credit entries to an EFT account of a participating vendor as payment for obligations that participating state agencies owe to the vendor.
      2. (B) The comptroller may initiate a credit entry to an EFT account of a participating vendor even if the vendor requests a particular payment to be made by warrant. This subparagraph does not apply after the designation of the account has been terminated.
      3. (C) The comptroller is not obligated to make a payment via the electronic funds transfer system even if a participating vendor or a participating state agency requests it.

   2. (2) Initiating debit entries.

      1. (A) The comptroller may initiate a debit entry to an EFT account of a participating vendor if the appropriate paying state agency determines that an erroneous credit entry has been made to the account.

      2. (B) The comptroller may initiate a debit entry to an account of a vendor if:

         1. (i) the appropriate paying state agency determines that an erroneous credit entry has been made to the account;
         2. (ii) the erroneous credit entry was made to the account when it was an EFT account; and
         3. (iii) the erroneous credit entry was made when the vendor was a participating vendor.
      3. (C) The comptroller may initiate a debit entry without prior notice to a participating vendor or a vendor.
   3. (3) Compliance with the rules. The comptroller must comply with the rules when initiating credit entries and debit entries.
   4. (4) Contacts. The comptroller may contact a participating state agency or a participating vendor if the comptroller has a question about a credit entry or debit entry.
   5. (5) Termination of a participating vendor's participation. The comptroller may terminate the participation of a participating vendor for any reason, at any time, and without prior notice to the vendor.
   6. (6) Termination of the designation of an EFT account. The comptroller may terminate the designation of an EFT account for any reason, at any time, and without prior notice to the participating vendor that owns the account.
   7. (7) Stop payments. The comptroller's authority to stop the payment of a credit entry is equivalent to the comptroller's authority to stop the payment of a warrant.

5. (e) Acceptance and return of credit entries.

   1. (1) Voluntary acceptance of credit entries. Neither a participating vendor nor a participating vendor's financial institution is required to accept a credit entry. However, a rejected credit entry must be returned in accordance with the rules.

   2. (2) Liability resulting from the rejection of credit entries.

      1. (A) The comptroller, the state treasurer, and a paying state agency are not liable for the damages resulting from the rejection of a credit entry by a participating vendor or its financial institution.

      2. (B) When a credit entry is rejected, the State of Texas and its participating state agencies:

         1. (i) are not in default on any obligation; and
         2. (ii) shall not suffer any loss of discount or incur any penalty, interest, or late charge by reason of the rejection.
   3. (3) Texas Prompt Payment Act. Paragraph (2)(B)(ii) of this subsection applies to the interest that would otherwise be payable under the Texas Prompt Payment Act.

   4. (4) Rejection of credit entries. Even if a participating vendor or its financial institution does not reject a credit entry in accordance with the rules, the vendor does not accept a credit entry as being in the correct amount if:

      1. (A) the participating vendor ensures that the paying state agency receives written notice by no later than the thirtieth calendar day after the participating vendor's financial institution receives the credit entry; and
      2. (B) the written notice clearly states that the amount of the credit entry is erroneous.

6. (f) Credit for paying state agencies.

   1. (1) Applicability. This subsection applies unless a participating vendor returns a credit entry in accordance with subsection (e) of this section.
   2. (2) When credit required. A participating vendor shall credit the paying state agency for the amount of a credit entry on the effective date of the credit entry, regardless of when the vendor's financial institution posts the credit entry to the vendor's EFT account.
   3. (3) Accrual of interest and other charges or fees. The accrual of interest or other charges or fees payable with respect to the amount of a credit entry shall cease when a participating vendor credits the paying state agency for the credit entry.

7. (g) Credit entry information.

   1. (1) Definition. For a particular credit entry, the term "credit entry information" means:

      1. (A) the participating vendor's invoice number up to seven digits (if and as supplied to the comptroller by the paying state agency);
      2. (B) the paying state agency's voucher number (if supplied to the comptroller by the agency);
      3. (C) the agency number of the paying state agency; and
      4. (D) the telephone number of the paying state agency.
   2. (2) Responsibility of the comptroller. The comptroller shall accompany each credit entry with credit entry information.
   3. (3) Liability for refusal to provide credit entry information. The comptroller, the state treasurer, and a paying state agency are not liable for the failure, inability, or refusal of a participating vendor's financial institution to give credit entry information to the vendor.

8. (h) Liability.

   1. (1) Liability for actions of certain parties. A participating vendor, the State of Texas, a participating state agency, a paying state agency, the comptroller, the state treasurer, and a custodial state agency are not liable for the act or omission of any automated clearinghouse, financial institution, or other person or entity except as specified in the rules.
   2. (2) Liability for actions of participating state agencies or paying state agencies. Neither the comptroller nor the state treasurer is liable for damages arising out of delays caused or errors committed by a participating state agency, a paying state agency, or a custodial state agency.

9. (i) Miscellaneous provisions.

   1. (1) Effective date. Except as otherwise provided in this subsection, this section first took effect on June 10, 1992.
   2. (2) Applicability of section. This section applies to all vendors whose payments from participating state agencies are made through the electronic funds transfer system, including vendors whose payments were first made through the electronic funds transfer system before June 10, 1992.

   3. (3) Existing accounts.

      1. (A) This subparagraph applies to each account of a vendor that received a payment to the vendor through the electronic funds transfer system before June 10, 1992. Each account is an EFT account for the purpose of this section unless:

         1. (i) the vendor properly notified the custodial state agency of the account before June 10, 1992 that the account would no longer be available to receive electronic funds transfers; and
         2. (ii) the notification was still in effect on June 10, 1992.
      2. (B) A vendor that has one or more EFT accounts under subparagraph (A) of this paragraph on June 10, 1992 is a participating vendor for the purpose of this section.
      3. (C) A custodial state agency for more than one EFT account of a participating vendor on June 10, 1992 may terminate the designation of one or more of those accounts only if subsection (c)(4) of this section authorizes the termination. The requirement in subsection (c)(2) of this section to obtain the consent of the comptroller before designating a second or subsequent EFT account does not apply to the accounts that are EFT accounts under subparagraph (A) of this paragraph on June 10, 1992.

      4. (D) Except as otherwise provided by this subparagraph, an account that was an EFT account under subparagraph (A) of this paragraph on June 10, 1992, lost its status as an EFT account at 11:59 p.m. on June 10, 1992.

         1. (i) The vendor that owns the account could have prevented this loss of status if the vendor had redesignated the account as an EFT account by properly completing and submitting an authorization form in accordance with this section and the redesignation had taken effect before the account lost its status.
         2. (ii) If an account has lost its status as an EFT account under this subparagraph, then the vendor that owns the account may reinstate the account as an EFT account if the vendor redesignates the account by properly completing and submitting an authorization form in accordance with this section.

   4. (4) References to payments by the comptroller. When this section refers to the comptroller paying an individual or entity, the reference means:

      1. (A) the comptroller's issuance of a warrant or initiation of a credit entry in accordance with a payment voucher submitted to the comptroller by another state agency; or
      2. (B) the comptroller's payment of an individual or entity in satisfaction of obligations owed to the individual or entity by the comptroller as a result of the fulfillment of the comptroller's constitutional or statutory duties.
   5. (5) Conflicts. If a provision in this section irreconcilably conflicts with a law of the United States or the State of Texas, a requirement of the National Automated Clearing House Association concerning cash concentration disbursement, or the Federal Reserve System's Regulation E, then the law, requirement, or regulation prevails over the provision.

Source Note:The provisions of this §5.12 adopted to be effective June 10, 1992, 17 TexReg 3909; amended to be effective December 6, 1996, 21 TexReg 11520.